Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — HOME DEPARTMENT

Special Constables

Mr. Pawsey: To ask the Secretary of State for the Home Department what impact recent changes to the conditions of special constables have had on recruiting; and what plans he has further to increase numbers of specials.

The Parliamentary Under-Secretary of State for the Home Department (Mr. Peter Lloyd): We are taking a series of measures to increase the strength of the special constabulary with the aim of recruiting an additional 10,000 special constables. We launched a national recruiting campaign at the beginning of this year and are shortly introducing a pilot scheme to pay a bounty to specials, as a further boost to recruitment. The latest information, from a sample of forces, suggests that strength increased by up to 6 per cent. in the first half of this year.

Mr. Pawsey: I am grateful to my hon. Friend for that exceedingly full and comprehensive reply—the type of reply that we have come to expect from this Minister. Does he agree that more special constables would do a great deal to reduce levels of crime, particularly if they were better trained and more adequately remunerated? Will he redouble his efforts to establish a corps of special constables who would play the same part as the Territorial Army vis-à-vis the regular Army?

Mr. Lloyd: I am grateful to my hon. Friend for his opening remarks, after which perhaps I should be brief in answering his supplementary question. The specials certainly show the kind of public spirit and professionalism of the Territorials. The difference, of course, is that the specials are not preparing for a conflict that we hope will never happen. They are already directly and effectively involved in the fight against crime—which, alas, is all too real—and are performing the role that my hon. Friend wants them to perform.

Work Camps

Mr. Speller: To ask the Secretary of State for the Home Department if he will provide open air work camps for younger offenders serving custodial sentences.

The Minister of State, Home Office (Mrs. Angela Rumbold): Purposeful work is an important part of the

regime for young offenders. There are at present opportunities to undertake agricultural and horticultural work in the open air at 23 young offender institutions.

Mr. Speller: Is my right hon. Friend aware that her Department may to some extent be missing the point? There is general disgust at the short non-custodial sentences that are being passed because of the absence of space in prisons of various sorts. In view of the number of military establishments underused and basically secure, should not we use those—and, if need be, make use of military personnel, too—to enable us to stop the amazing amount of re-offending by those on non-custodial sentences?

Mrs. Rumbold: There are tough and dirty jobs for youngsters who are on probation and in non-custodial care, so I would not necessarily accept my hon. Friend's strictures on that point. I repeat what my right hon. Friend told the House on Tuesday: if the prison population continues to rise, he will consider calling on the assistance of the military and, possibly, calling for the use of military accommodation.

Mr. Fraser: Has it occurred to the Minister that the problem is that there are plenty of young people camped out in the open air, but that they do not have any work?

Mrs. Rumbold: The question refers to young offenders. Those in young offender institutions are occupied satisfactorily, to a certain extent, in open air work.

Mr. Marlow: rose——

Mr. Speaker: Mr. Mellor. No, Mr. Marlow.

Mr. Marlow: I am very flattered, Mr. Speaker.
What are we going to do about those young thugs and hooligans who have no respect for authority, no respect for law and order, no respect for property, no respect for elderly people and who terrorise communities? Is it not time that instead of having open air imprisonment we had an open air thrashing or open air stocks to stick them in?

Mrs. Rumbold: I well understand my hon. Friend's outrage at the behaviour of some youngsters today. Had he been in his place on Tuesday, when my right hon. Friend made the opening speech on the Loyal Address, he would have heard him say that the Government would introduce a measure to deal with the young thugs, as my hon. Friend calls them, who indulge in joyriding, a practice which hon. Members in all parts of the House deplore; those young people will, therefore, be offending.

Mr. Sheerman: Is not it time that the Minister ignored some of the siren voices behind her? She knows that the peak age for offending is 18. The 16 to 18-year-old group is the very group that has been punished by the Government. They have been punished by being stripped of their ability to claim benefit and by the pushing down of the real value of their training allowance. They have been punished in terms of unemployment and homelessness. Is not it about time that we had some more positive policies? Then young people would respect the Government.

Mrs. Rumbold: Is not it time that Opposition Members realised that there is an absolute necessity for young people to grow up with respect for the law, property and persons? There is absolutely no need for young people to


commit crimes when they have available to them perfectly good training courses that have been provided by the Government and with Government money.

Mr. Shersby: Does my right hon. Friend recall that until the Criminal Justice Act 1988 amended the law, the penalty for taking away a vehicle without consent was up to three years' custodial sentence? That penalty was reduced at the time to six months. Is it my right hon. Friend's intention to restore a custodial sentence of up to two years for that offence?

Mrs. Rumbold: Yes, Sir.

Policing, Cumbria

Mr. Campbell-Savours: To ask the Secretary of State for the Home Department what representations he has received from Cumbria county council on the question of policing in the county.

The Secretary of State for the Home Department (Mr. Kenneth Baker): I am considering the police authority's application for an additional 24 police posts for 1992–93.

Mr. Campbell-Savours: Has the Home Secretary noted the dramatic 52 per cent. increase in crime in west Cumbria, which is reflected in vandalism, violence, intimidation of the elderly, intimidation of shopkeepers, ram-raiding and burglary? Does he regard those figures as appalling? When he talks about appointing 1,000 police officers nationally, does he understand that that means only 1·5 additional police officers per constituency, which does not begin to meet the problem? We need 30 police officers immediately. The people of Workington demand those appointments.

Mr. Baker: The hon. Gentleman will recall that since we have been in office, there has been an increase in the strength of the Cumbrian police of 110 uniformed officers and 144 civilians, making a total increase of 254. There were eight extra police officers this year, seven of them on patrol duties. I understand the hon. Gentleman's concern, because I have seen the reports of the increase in vandalism and hooliganism in Workington. I assure the hon. Gentleman that since we have been in office we have increased expenditure for the Cumbrian police authority by 80 per cent.

Mr. Campbell-Savours: It is not enough.

Mr. Baker: When Labour were in office they cut police expenditure by 2 per cent.

Mr. Campbell-Savours: Do something.

Mr. Speaker: Order.

Mr. Favell: My right hon. Friend may have read reports in the newspapers today that the European Commission wants to abolish newspaper boys and girls in Cumbria and elsewhere in the United Kingdom. Are the police likely to be involved in that?

Mr. Baker: Not as far as I know.

Mr. Hattersley: Is the problem to which the Home Secretary referred special to Cumbria or is it a general one? Can he tell us of one chief officer of police in Britain who believes that he has sufficient police officers to perform the duties imposed upon him?

Mr. Baker: About eight or 10 chief constables are not asking for an increase in police forces for next year—[Interruption.]—and I shall be glad to send the right hon. Gentleman a list. If he is so proud of police numbers, he should recall that when he was a member of the Labour Cabinet he cut police expenditure and left our police 8,000 under establishment. He is the guilty one.

Mr. Paice: I am sure that the public in Cumbria and elsewhere realise that no other Government would allocate these extra resources for the police. When my right hon. Friend is considering Cumbria's representations, will he also consider the position of Cambridgeshire, where the number of police per thousand population is the lowest in the country?

Mr. Baker: I shall certainly consider that. As I said, I have secured increased expenditure next year for another 1,000 uniformed police officers, in addition to the further 600 this year. Since 1979, there has been an increase of 15,000 uniformed officers, whereas their numbers were cut under the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley).

Mr. Campbell-Savours: On a point of order, Mr. Speaker:

Mr. Speaker: No point of order arises from this.

Mr. Campbell-Savours: I wish to raise the matter on Adjournment.

Mr. Speaker: On the Adjournment. Yes, all right.

Child Molesters

Mr. Cryer: To ask the Secretary of State for the Home Department if he will make a statement on sentencing policy towards sex offenders who have molested children.

The Minister of State, Home Office (Mr. John Patten): This is a serious issue. The Criminal Justice Act 1991 endorses the severity with which the courts view these offences and strengthens their powers to protect the public from offenders. Courts will be able to impose on a sexual offender who poses a serious risk to the public a longer custodial sentence than would be justified solely by the seriousness of the offence. The courts will be able to order longer and more intensive supervision and treatment for sex offenders.

Mr. Cryer: What does the Minister say to my constituents who, following abuse by their father for many years, summoned up enough courage to give evidence in court after he attacked the 10-year-old granddaughter of the family? After they had gone through the ordeal of giving evidence, their father, who was found guilty of eight serious charges with nine being left on the file, was put on probation and allocated to a hostel not two miles from where his last victim lives and where he can be seen by the family as they pass through the town centre. Does the Minister realise that that is deeply upsetting to the family, who have been devastated by the experience? Some form of custody—whether in hospital or in prison is a moot point—is required to give peace of mind to the people who gave evidence and who displayed much courage and fortitude in so doing.

Mr. Patten: I entirely understand the strong feelings of the hon. Gentleman's constituents and I sympathise with them. He will appreciate that I am not aware of the details of the case. The hon. Gentleman is concerned about the placement of this convicted person in a nearby hostel, so if he will give me the details of the case I shall have it investigated by Her Majesty's inspectorate of probation.

Rev. Martin Smyth: The Minister has shown concern about sentencing patterns, but does his concern extend beyond that to cases where the prosecution service has not been prepared to prosecute an accused person? Does not that leave others open to molestation as well?

Mr. Patten: The Crown prosecution service always faces the difficult task of obtaining adequate evidence to secure a conviction in court. However, it should be some consolation to the hon. Gentleman and the hon. Member for Bradford, South (Mr. Cryer) that in the past five years the average sentence for rape has increased by 70 per cent. The Criminal Justice Act will allow for much longer supervision of sex offenders after they are released from gaol. My opinion is that sex offending cannot be cured, but it can and should be better supervised and controlled.

Mr. Dickens: Does my right hon. Friend agree that many of the views that I have expressed in the House, which at times have been received with ridicule and dismay, have become law subsequently? If the Home Office really wants to stop the abuse of children and the rape of women, it must pass a law allowing the castration of the perpetrators, not for a first offence, in case there is a mistake, but for a second offence—unless people are unfit to plead. That is the way to stop it and that sanction would hardly ever have to be used because it would be the ultimate deterrent for men.

Mr. Patten: My hon. Friend's suggestion is not the present intention of Her Majesty's Government. We intend to reinforce the courts,as we have done in the Criminal Justice Act 1991, by sustaining their powers to sentence convicted sex offenders to life imprisonment. The reforms introduced by my right hon. Friend the Home Secretary will mean two things: first, convicted sex offenders will, rightly, spend much longer in prison; and, secondly, they will be supervised when they are released.

Racist Attacks

Mr. Cohen: To ask the Secretary of State for the Home Department what recent representations he has received urging him to take new action to combat racist attacks.

Mr. Kenneth Baker: In the new year I will publish a progress report on the work of the police service and other agencies in tackling the problem of racially motivated attacks. I make it clear that there should be no place for racially motivated attacks in our country.

Mr. Cohen: Is the right hon. Gentleman aware that it has been calculated that there is one racial attack every 30 minutes and that the savagery of such attacks has increased? With racism on the increase in Europe and in this country because of high unemployment, is not there a danger that there could be yet more racial assaults in Britain? Have not calls for action by organisations such as the Society for Black Lawyers been met by Government

intransigence? Is not it time to have a specific crime of racial harassment, as I proposed in my 1985 Racial Harassment Bill?

Mr. Baker: I do not agree with the hon. Gentleman's latter point. I recognise that there has been an increase in racially motivated attacks—there was a rise in 1990. As the hon. Gentleman knows from a debate on London which he attended, last year nearly 3,000 attacks were reported in London—an increase of 8 per cent. The clear-up rate is about 30 per cent. I assure the House that, in all the speeches that I have made at police meetings and conferences this year, I have repeatedly stressed to the police that I want them to give this type of crime high priority.

Mr. Janman: Clearly the tributary of the River Tiber that runs through Leyton is already foaming. Does my right hon. Friend agree that the best and most subtle way to prevent such attacks is to ensure that the British people know that they have a Government who are taking the steps necessary to keep firm control of immigration and particularly to prevent people from abusing our immigration rules by entering this country under the bogus concept of being political refugees? I congratulate my right hon. Friend on the steps that he has taken to do just that.

Mr. Baker: We have followed a policy of keeping tight control of immigration. As my hon. Friend knows, I shall introduce the Asylum Bill to deal with that problem. Over the years, successive Governments of all complexions have worked to improve race relations and Britain probably has the best record in Europe for harmonious race relations.

Asylum

Mr. Corbyn: To ask the Secretary of State for the Home Department what representations he has received concerning the access to advice of asylum seekers.

Mr. Peter Lloyd: Following my right hon. Friend's statement about asylum on 2 July, we have received about 100 letters from hon. Members and about 750 from members of the public and interested organisations. Most have included comments on the availability of advice for asylum seekers.

Mr. Corbyn: Will the Minister concede that the proposal in the Asylum Bill removes the right of people seeking political asylum to have access to green form advice? Is he aware that that proposal has been met with horror by advice agencies, legal aid practices and members of the United Kingdom Immigrants Advisory Service? Should not he announce that he will withdraw those parts of the Bill and give people seeking political asylum the same rights to legal advice as anyone else would have, rather than introduce this appalling system under which they will not have the same equality before the law?

Mr. Lloyd: The hon. Gentleman is quite mistaken. There are no such proposals in the Bill and we never suggested that there should be. We have said that immigration and asylum cases are unique in that the Government and the United Nations fund a free, professional legal advice and representation service in the shape of UKIAS and the Government fund free solicitors' advice through the green form. With the extension of appeal rights to all asylum seekers, it is not unreasonable


to propose—as the Lord Chancellor and my right hon. Friend the Home Secretary propose—that this anomalous double provision should end and that increased resources for advice should be concentrated on UKIAS, especially as the service has a better record of winning cases than solicitors and is more cost effective.

Mr. Nicholls: It is clear to solicitors and to many other people that our present asylum procedures are being abused. That should stop. Does my hon. Friend agree that it does the cause of racial integration no good at all that our procedures should be abused? Does he reject the comments that we have heard from the Opposition which have much more to do with their courting votes than with human rights?

Mr. Lloyd: Of course asylum procedures should not be abused. Those who are making asylum claims should have access to free professional legal advice, as they want it. We propose to deal with abuses and to ensure that asylum seekers have the free legal advice that they need.

Mr. Darling: Does the Minister accept that UKIAS is not capable of providing the same level of professional advice as can presently be provided under the legal aid system? Does he accept that individuals should have the right to choose representation which represents the best value for money and that there is no saving to the Treasury under his proposals? Will he explain why he wrote to UKIAS on 7 October threatening that unless it accepted the Government's proposals he would withdraw its funding or curtail it completely?

Mr. Lloyd: What I said to UKIAS—I have had two meetings with the organisation and written to it—is that the availability of green form aid is finally a matter for the Government and Parliament, not for UKIAS. I also said that as we are increasing UKIAS's funding and its ability to represent and advise, if it was unwilling to advise those seeking advice on asylum, it called into question whether the funding for advice, not representation, should go to UKIAS. There is an alternative. We could fund all advice through the green form, but that would not be especially helpful to asylum seekers, as UKIAS has a better record of success in giving advice and making representations to adjudicators and tribunals.

Mr. Lawrence: What proportion of asylum seekers come into this country on visitors' permits and then decide that they are in fear of persecution just as their permits come to an end? Is not it easy to give those people advice?

Mr. Lloyd: Yes. About three quarters of asylum claimants are already in the country, many of them legitimately as students or visitors and some of them illegitimately, as they have entered the country illegally. Each case needs to be considered on its merits. There can be reasons why people make a claim for asylum after they have been here for some time and we consider all cases properly. We believe that every asylum seeker, whether in-country or arriving at the ports, should have access to good free legal advice.

Free Television Licences

Mr. Skinner: To ask the Secretary of State for the Home Department whether he will now introduce free television licences for pensioners; and if he will make a statement.

Mr. Peter Lloyd: As I have made clear to the hon. Member on the many previous occasions on which he has asked this question, we have no plans to introduce free or concessionary television licences for all pensioners. That would be a crude and non-selective instrument of social policy costing £470 million a year. It would benefit many pensioners who can well afford the fee and would mean that other licence holders would have to pay £116 for their colour licence.

Mr. Skinner: This Tory Government are a hard-hearted bunch. Have not we reached a pathetic state of affairs when, as a result of the 1988 decision, 75-year-old widows in warden accommodation cannot have a free television licence, yet others who are younger might receive it because they qualified before 1988? Now, with all their claptrap about citizens charters, the Government have had the BBC send to every Member of Parliament letters carrying the Tory party propaganda that they cannot allow pensioners to have a free television licence. They should be ashamed of themselves.

Mr. Lloyd: Not merely does the hon. Gentleman ask the same question each time; he asks the same supplementary. The only difference this time is that arrangements have been made for the BBC to collect the licence fee, but the rules are precisely the same as they were when they were collected by the Government. The hon. Gentleman ought to bear it in mind that the rules are very clear. It is possible for local authorities to organise their elderly people's accommodation provision in such a way as to gain the concessionary licence. The benefit should be given to those who are most in need of it. We have concentrated the money that the hon. Gentleman would give to pensioners, whether they need it or not, into the income support rates of those who are worst off. That is the correct, fair and just way to do it.

Mr. Hind: Does my hon. Friend accept, however, that among pensioners, particularly those who took up residence in sheltered accommodation after 1988, there is a real fear of injustice, in that some of them have to pay the full licence and some of them do not? I hope that my hon. Friend will look at that problem, together with the BBC licence as a whole. Pensioners are aware that they do not have to pay for ITV or any other channels but that they are called upon to pay for BBC television programmes. My hon. Friend should look at the licence as a whole.

Mr. Lloyd: We are going to look at the whole question of BBC financing and the licence fee in the run-up to the renewal of the charter.

Mr. Salmond: Will the Minister reconsider the point made by the hon. Member for Bolsover (Mr. Skinner)? Is the Minister aware that Members of Parliament, and anybody else with two homes, need only one television licence to cover both homes, the assumption being that they are not watching television simultaneously in both homes. Will the Minister therefore announce a concession:


that all old age pensioners should be given the right to watch television without having to pay for a television licence?

Mr. Lloyd: I do not believe that the hon. Gentleman correctly states the law. No doubt a BBC inspection van will be visiting him.

Television Franchises

Mr. Simon Coombs: To ask the Secretary of State for the Home Department if he will make a statement on the recent allocation of regional television franchises by the Independent Television Commission.

Mr. Kenneth Baker: The commission was carrying out the responsibilities laid on it by Parliament in the Broadcasting Act 1990. The decisions on channel 3, and other licences, are a matter for the commission.

Mr. Coombs: In view of the widespread and sometimes ill-founded criticism of the recent franchise round and despite the uniform excellence of the successful tenders, will my right hon. Friend nevertheless consider the possibility of providing a review system so as either to show up ways in which it could be improved in future or to demonstrate that an extremely good job has been done by the Independent Television Commission?

Mr. Baker: I think that a good job has been done by the ITC, but I am prepared to consider any representations that are made to me about the future determination of licences. The situation will change in the 1990s and beyond. There will be a greater proliferation of services, well beyond these licences, and at least one other channel, channel 5.

Mr. Maclennan: Does the Home Secretary share the view of the right hon. Member for Finchley (Mrs. Thatcher) in her letter to the outgoing chairman of TV-am? Does he feel like offering a similar apology?

Mr. Baker: When there are 40 bids for 16 licences, some companies will lose out. The system has resulted in new blood coming into the television industry. Some of the companies that have been displaced have, in their time, displaced others. The opportunity that they now have is to become independent production companies, an opportunity that they did not have in the last round of licence decisions.

Dame Janet Fookes: Can my right hon. Friend answer a riddle for me? How is it that Television South West passed the quality threshold, offered by far the most money but still lost?

Mr. Baker: That is a riddle for the ITC, not me, to answer. The ITC made the determination and it would be inappropriate for me to comment upon the matter, especially as I believe that it is now sub judice, because the company has applied for judicial review.

Mr. Corbett: Does the Home Secretary, in common with his right hon. Friend the former Prime Minister. now feel too painfully aware that the franchise round has ended in farce, with some companies losing their licences for offering too much and others failing because they offered too little? Will the right hon. Gentleman now acknowledge that a system based on the highest bid was always likely to undermine the quality and variety of British television?

What message has he for the 2,000 television staff who lost their jobs in the run-up to the franchise round, and the similar number who will now be put out of work?

Mr. Baker: I do not agree at all. New blood has come into the industry, and many of the companies now have the opportunity to become independent production companies. I do not agree with the hon. Gentleman's assertion that the franchise round has been unsuccessful. On the contrary, we have always sought to increase viewer choise. We introduced Independent Television; the Labour party was against it. We have introduced new opportunities for television, and we will introduce a new channel—Channel 5. We believe in more viewer choice and more competition. That will improve quality, and the Labour party has always resisted that.

Mr. John Greenway: Does my right hon. Friend agree that the Broadcasting Act 1990 placed on the ITC the requirement to ensure that all bids were sustainable and stable for the whole 10 years of the franchise? Is not the ITC's judgment that that is the case both with the existing franchisees who have retained their licences and with some of the newer companies? At the press conference at which the ITC announced the licences Mr. Simon Albery, who ran the campaign for quality television, said to me, "Quality has won".

Mr. Baker: I am sure that that will prove the case. Whenever there has been a change within television in this country there has always been the accusation that quality would suffer. That has not happened. Over the past 30 years, as choice and competition have worked their way through, variety and quality have improved.

Political Asylum

Mr. Roger King: To ask the Secretary of State for the Home Department what is the present level of those seeking political asylum; and what were the comparable figures in 1989.

Mr. Kenneth Baker: Between January and September this year the average monthly total of those seeking political refugee status in this country has been about 3,800. The monthly average in 1989 was 950. These figures exclude dependants.

Mr. King: Is my right hon. Friend aware of the widespread concern at the large number of people seeking political asylum? Is he further aware that in a city such as Birmingham, where problems arise over bringing families into the United Kingdom, there is widespread disgust and dismay at the high number of bogus asylum applications? Is he also aware that he has the united resolve of Conservative Members for the speedy passage of his Bill?

Mr. Baker: I thank my hon. Friend. I said that the average number was 3,800. The actual figure for applications in October was 4,400 and the number is likely to reach between 45,000 and 50,000 this year, whereas we used to receive 2,000 or 3,000 applications. This is a serious and important problem which has to be tackled. That is why we shall introduce the Asylum Bill, which will be debated next week. I am surprised that the Labour party has decided to oppose it.

Mr. Madden: Is the Home Secretary aware of the legal opinion that to restrict access to legal advice and


representation in asylum and immigration matters may be a breach of the law? Will he instruct his Ministers to stop trying to bribe and blackmail the United Kingdom Immigrants Advisory Service, which does not wish to collude in the Government's plans to pander to Essex man by restricting the longstanding traditional rights of people fleeing violence and persecution to seek refuge in this country?

Mr. Baker: This country has a long tradition of accepting genuine political refugees, but there is no doubt that the fact that three quarters of all applications are made by people who have been living in this country for weeks, months and, in some cases, years, is tantamount to an abuse of the system. What we must do is to distinguish between bogus and genuine refugees. That is what we will do, and we will do it fairly. Not only that—we intend to increase and extend the right of access to an appellate system, which does not exist at the moment.

Mr. Ashby: Does my right hon. Friend agree that the greatest injustice to genuine asylum seekers is to be found in the enormously long delays that occur in the processing of applications? What steps has my right hon. Friend taken to reduce those delays?

Mr. Baker: In May of this year, we were pressed by Amnesty International and other refugee groups to speed up the process of determination, and the Bill before the House, which will be debated next week, sets out a scheme that will allow determination to be decided within a period of three months. That applies not only to a decision but to appearing under an appellate process. That will speed up the existing time, which can be anything up to two to three years. It is important that we decide the matter quickly because, if we do so, the bogus applicants can be returned to the countries from which they came.

Rural Magistrates Courts

Mr. Ieuan Wyn Jones: To ask the Secretary of State for the Home Department whether he has any plans to close or amalgamate rural magistrates courts in England and Wales during the next 12 months.

Mr. John Patten: No, Sir. Proposals for the closure of magistrates courthouses or the amalgamation of petty sessional divisions are the responsibility of magistrates courts committees after consulting those concerned.

Mr. Jones: What guidelines does the Home Department give to magistrates courts committees on how they should approach the closure and amalgamation of rural magistrates courts? I am sure that the Minister will be aware—representing a rural area, as I also do—that there is considerable concern about closures and amalgamations that lead to both defendants and witnesses having to travel vast distances. Does he agree that access to justice is more important than administrative convenience?

Mr. Patten: I entirely agree with the hon. Gentleman. That is an extremely important point, and access to justice in rural areas is, indeed, subject to guidance from the Home Office. Let me add that, in taking recent decisions concerning rural areas, the Home Office has almost invariably supported those who have felt that rural courthouses should be kept open. I have looked up my

own record over the past six months, and I find that the only courthouse whose closure I approved was in Leicestershire and was precisely 500 yd from a new courthouse costing £8 million which we had erected to take its place.

Mr. Bellingham: Does my right hon. Friend agree that, if justice is to be seen to be done, it is far better for it to be dispensed closer to the community in which the crime took place? Will he join me in saluting the work done by some of the small magistrates courts in west Norfolk, such as those in Hunstanton and Fakenham, and does he agree that every effort should be made to ensure that they stay open?

Mr. Patten: It is extremely important that small rural benches—provided that they are large enough to provide the necessary range of skills and an adequate number of people to dispense rural justice—are kept. But it is also the case that suggestions for amalgamation of rural—or, indeed, urban—benches come not from my right hon. Friend the Home Secretary but from the magistrates courts committees in the areas concerned.

Mr. Randall: Is the Minister aware that the Opposition approve in principle of measures to enhance the cost effectiveness of our magistrates courts system? Is he also aware, however, that the Government's policy of strict cash limits can in some cases be seen as a blunt instrument whose use could result in closures of courts in many local communities? Will the Minister now tell the House how many local magistrates courts he estimates are likely to close as a result of the Government's new funding policy? Or has he not bothered to work it out?

Mr. Patten: The Government's new funding policy—which was supported by the Labour party during the passage of the Criminal Justice Act 1991, so the hon. Gentleman cannot complain about that—is aimed at ensuring that the workload is taken into account in allocating resources while encouraging the management of magistrates courts to improve the efficiency of local justice so that it is better carried out. Suggestions for closures and amalgamations come from the individual magistrates courts committees in the areas in question.

Sir Anthony Grant: Is my right hon. Friend aware that I am extremely grateful to him for the wise decision to retain the St. Neots and Huntingdon courthouses? Is he also aware that there has been considerable disquiet over the proposed amalgamation of the St. Neots and Huntingdon bench? Will he carefully consider the representations that I have sent to him on that subject?

Mr. Patten: I am glad that my hon. Friend believes that I took a wise decision over those courthouse closures and they remain open. I will of course carefully consider any correspondence that my hon. Friend has sent to me.

Electoral Register

Mr. Harry Barnes: To ask the Secretary of State for the Home Department what are his Department's plans to maximise the number of people on the 1992–93 electoral register; and if he will make a statement.

Mrs. Rumbold: As in previous years we shall conduct a nationwide advertising campaign in the early autumn to encourage people to complete and return the electoral


registration form. We shall also continue our annual research into the working methods of electoral registration officers, and produce updated best practice notes to assist them in compiling an accurate register.

Mr. Barnes: The current electoral register is a mess. One million people are missing from it according to the Office of Population Censuses and Surveys. There is to be a new register on which the general election could be fought. There is time to put the register right. Will the Government spend advertising money to achieve that? Only 0·3 per cent. of the advertising budget is spent on electoral registration. We have time to put things democratically right if the Government will act now.

Mrs. Rumbold: The hon. Gentleman should know that advertising money is being spent and electoral registration officers are working hard to ensure that their electoral registers are up to date and accurate.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Jessel: To ask the Prime Minister if he will list his official engagements for Thursday 7 November.

The Lord President of the Council and Leader of the House of Commons (Mr. John MacGregor): I have been asked to reply.

Hon. Members: Where is he?

Mr. Speaker: Order. I call the Leader of the House.

Mr. MacGregor: This morning my right hon. Friend the Prime Minister had a bilateral with President Bush in Rome. He is currently attending the NATO summit now under way there. That summit will set the future course for NATO to ensure that it remains as it has been—a bedrock of stability in a still uncertain world. The fact that Opposition Members should regret the fact that my right hon. Friend is in Rome, shows how little attention they pay to defence and NATO matters. [Interruption.]

Mr. Speaker: Order. This kind of thing gives a very bad impression elsewhere.

Mr. Jessel: On Europe, to put it beyond all doubt in this House, in the country, and on the continent, will my right hon. Friend reaffirm that it is the policy of Her Majesty's Government that Britain shall not go down the route of a federal Europe and that it is for Britain to decide on the future of her own currency?

Mr. MacGregor: I am happy to give my hon. Friend the assurance that we are not going down the route of a federal Europe. With regard to a single currency and economic and monetary union, my right hon. Friend the Prime Minister has made it clear that the Government are not prepared to commit Britain now to a single currency. We will be able shortly to debate those matters more fully in the House, but we have on many occasions made it clear that this Parliament will decide on the single currency issue at some date well into the future if and when it should arise.

Mr. Kinnock: Is the—[Interruption.]

Mr. Speaker: Order. I call Mr. Kinnock.

Hon. Members: Where is he?

Mr. Kinnock: All present and correct, Sir.
Is the Leader of the House aware that three times in the past 24 hours the Chancellor of the Exchequer has refused to answer direct questions about the Government's plans for further increases in VAT? Is that not surprising because the Chancellor has repeatedly been eager to make precise pledges of cuts in income tax to 20p in the medium term? Will the right hon. Gentleman tell us now, in precise terms, what are the Government's plans for making further increases in VAT?

Mr. MacGregor: The right hon. Gentleman will be all present on the Opposition Benches for some time to come and will not be leading for Britain at future NATO summits. In answer to his question, the right hon. Gentleman knows very well that the commitment to income tax is one that would extend over the lifetime of the future Parliament and perhaps beyond that. That is a general commitment for some time to come. No precise dates have been given. It is not for the right hon. Gentleman to ask questions about tax, given the very high public spending commitments to which his party is committed.

Mr. Kinnock: The Leader of the House has even changed the line on what the Chancellor said on income tax this morning. As far as talking about tax is concerned, I realise the right hon. Gentleman's sensitivity. His Government have, after all, lifted the tax burden on the British people to the highest of any Government in history. The right hon. Gentleman is wriggling. Since the Prime Minister has announced the target rate for income tax, surely he can announce the target rate for VAT. If he can tell us the one, surely he can tell us the other. Why are the Government so specific on income tax and so shifty on VAT?

Mr. MacGregor: The right hon. Gentleman knows perfectly well that the commitment on income tax is a longer-term one and that we hope to achieve it as and when conditions permit and when it is prudent to do so. We have made that clear on many occasions. But it is really not for him to argue the case about taxes because, as we well know—[Interruption.] Opposition Members do not like that. The reason they do not like it is that they are so sensitive about it. We know perfectly well that the Labour party has committed itself to an additional £35,000 million of public spending and no capping on local authority expenditure. The two combined would mean a very high increase in the tax and community charge burden on all people.

Mr. Kinnock: The longer that the right hon. Gentleman speaks, the less he convinces. Will he tell us now? After making huge rises in VAT in the past 12 years, what are the Government's plans to make further increases in VAT?

Mr. MacGregor: The Government have made their public expenditure plans absolutely clear, and they are clear on the normal basis. It is equally clear—the right hon. Gentleman has not refuted this—that, in fact, the £35 billion spending commitment of the Labour party would mean either a very big increase in income tax and/or a very big increase in VAT, and it would be likely to be both.

Mr. Michael Brown: Does my right hon. Friend agree that the Government's proposals to introduce powers to


prevent local authorities from excessive spending by means of capping will be very well received by all those in Labour-controlled authorities who have to put up with excessive tax bills? Does my right hon. Friend agree also that those people will not welcome the pledge that was given from the Opposition Benches yesterday to ensure that high-spending Labour authorities can go with gay abandon to yet higher spending?

Mr. MacGregor: My hon. Friend is absolutely right. It is a point that will have to be stressed again and again. On top of the increased taxes—direct and indirect taxes that would come from their spending pledges—the Opposition have now committed themselves to no capping on high-spending local authorities. That can mean only higher community charge and council tax bills as well.

Sir David Steel: To ask the Prime Minister if he will list his official engagements for Thursday 7 November.

Mr. MacGregor: I have been asked to reply.
I refer the right hon. Gentleman to the reply that I gave some moments ago.

Sir David Steel: Is the Lord President aware that, at the end of last week, the Secretary of State for the Environment and the Secretary of State for Trade and Industry warmly welcomed the Government committee report recommending, among other environmental measures, an increase in petrol tax? They have referred that recommendation to the Chancellor of the Exchequer. Will he ensure before the Budget that, in any such conservation measure, account is taken of the needs of rural areas where—[Interruption.]

Mr. Speaker: Order. Interruptions take a lot of time.

Sir David Steel: Admittedly including the area that we will represent after today, in rural areas in which the car is a necessity and in which the cost of petrol is alreay high, what compensatory measures are the Government prepared to support?

Mr. MacGregor: My right hon. Friends have not committed the Government to any position on tax, but I notice that, as usual, the right hon. Gentleman wants to have it both ways. As it would put it, the Liberal Democratic party claims to make people face up to hard decisions by increasing pricing and taxes. However, because some of its Members of Parliament come from rural areas, they want those rural areas to be protected. It is typical of the right hon. Gentleman and his party to make different noises in different places.

Mr. Lord: Does my right hon. Friend agree that nothing is more damaging to the fabric of a nation than the failure properly to educate its children? May I urge him to press for a return to traditional standards of teaching in our primary schools as soon as possible?

Mr. MacGregor: I am sure that my hon. Friend will agree that what we are doing through the national curriculum, and especially in the testing of seven, 11, 14 and 16-year-olds, will ensure not only that we can monitor progress on standards, but that pupils who are falling behind will be given the assistance that they need to improve. The point of our educational reforms is to improve standards.

Mr. Menzies Campbell: To ask the Prime Minister if he will list his official engagements for Thursday 7 November.

Mr. MacGregor: I have been asked to reply.
I refer the hon. and learned Gentleman to the reply that I gave a few moments ago.

Mr. Campbell: The right hon. Gentleman will be aware that 22 November is the first anniversary of the sinking of the fishing vessel Antares in the Firth of Clyde as a result of its gear being snagged by the submarine HMS Trenchant. However, is he aware that the Royal Navy is proposing to hold a similar exercise in the same waters on the day immediately following that anniversary? Is not the timing of that exercise particularly insensitive, and is there any reason why it should not be postponed for a period of, say, a week as a mark of respect to the crew of the Antares, all of whom perished when the vessel was sunk?

Mr. MacGregor: I am sure that the hon. and learned Gentleman knows the considerable steps that have been taken by my right hon. Friend the Secretary of State for Defence and by the Minister of State for the Armed Forces to deal with the aftermath of that tragic incident. I shall draw the hon. and learned Gentleman's particular point to my right hon. Friend's attention.

Mr. Rathbone: As our Prime Minister is away at such an important summit conference—important for the security of the whole of the western world—does my right hon. Friend think it appropriate at this moment to reaffirm the Government's commitment to that European pillar, the Western European Union?

Mr. MacGregor: Yes, I agree with my hon. Friend. We have made it absolutely clear that, in our view, that body will play an important part in our future defence position. I am sure that that will be discussed today at the North Atlantic Treaty Organisation.

Mr. Gareth Wardell: To ask the Prime Minister if he will list his official engagements for Thursday 7 November.

Mr. MacGregor: I have been asked to reply.
I refer the hon. Gentleman to the reply that I gave a few moments ago.

Mr. Wardell: In view of his admission some weeks ago that this Government have imposed the heaviest tax burden in British history, will the right hon. Gentleman now apologise for the Chancellor's wholly inaccurate statement to the House yesterday that the Government have been cutting taxes ever since 1979?

Mr. MacGregor: The truth of the matter is that we have seen a substantial reduction in direct tax rates, a substantial improvement in standards of living and, as a result of the reduction in tax rates, an improvement in the tax base, which has enabled us not only to achieve increased public spending on a large scale in our key priority areas, especially health, but to achieve a reduction in direct income tax and, overall, considerably to improve our public sector borrowing requirement.

Q.5 Mr. Andrew Mitchell: To ask the Prime Minister if he will list his official engagements for Thursday 7 November.

Mr. MacGregor: I have been asked to reply.
I refer my hon. Friend to the reply that I gave a few moments ago.

Mr. Mitchell: Does my right hon. Friend accept that there is widespread support among parents for the Government's proposal that schools should make their public examination results available for publication in common form? Does he agree that that would give parents an objective answer to the question, "How is my child's school doing?", as well as further pressing back the frontiers of choice in education?

Mr. MacGregor: I entirely agree with my hon. Friend. He refers to an important part of the reforms that we are undertaking. I pay tribute to him for first raising the subject of league tables for schools' performances in the Bill that he introduced earlier in the year. League tables of examination results, destinations of school leavers, truancy rates and all the other items that we are suggesting will be an important aid towards improving parental choice. I was glad to note that that was endorsed by the chairman of the Audit Commission this morning.

Ms. Primarolo: Will the Leader of the House explain why the Government voted against the EC directive on maternity leave which would have given women a minimum of 16 weeks of maternity leave and protection from being sacked because they are pregnant? This is the second time in less than two weeks that the Government have failed to respond to the Prime Minister's so-called commitment to women's equality. Why should women believe anything that the Government say?

Mr. MacGregor: The hon. Lady is wrong. An agreement was reached yesterday which represents a sensible balance on maternity pay. It carries forward the interests of women without imposing an undue burden on

employers. The Government abstained on a different aspect relating to the treaty of Rome basis. We did not believe that the issue should have come within that particular article. That is why we abstained. The political agreement was reached clearly.
Under our policies more than one in three of the jobs created in the European Community for women were created during the past eight years in Britain. That is a clear indication of the opportunity and choice that we give.

Q.6 Mr. Thorne: To ask the Prime Minister if he will list his official engagements for Thursday 7 November.

Mr. MacGregor: I have been asked to reply.
I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Thorne: Does my right hon. Friend agree that the figures given yesterday for expenditure on the national health service, education and transport show our clear commitment to expenditure on those items? Does he agree that those people in the House who advocate expenditure without saying how much they are prepared to spend are entirely unconvincing?

Mr. MacGregor: My hon. Friend is right. The autumn statement yesterday demonstrated that we have substantially increased in real terms—after inflation—the spending in each of the three areas that my hon. Friend mentioned. Indeed, in health the additions announced yesterday represent £50 more for every man, woman and child in Britain. That means that the increase in health spending since we took office is 55 per cent. in real terms. My hon. Friend is also right to draw attention to the high additional spending programmes of some £35 billion advocated by the Labour party, which would put a crippling tax burden on so many families in Britain.

Business of the House

Dr. John Cunningham: Will the Leader of the House tell us the business for next week, please?

The Lord President of the Council and Leader of the House of Commons (Mr. John MacGregor): The business for next week will be as follows:

MONDAY 11 NOVEMBER—Second Reading of the Local Government Finance Bill (first day).
TUESDAY 12 NOVEMBER—Conclusion of Second Reading of the Local Government Finance Bill.
Consideration of timetable motion on the Local Government Finance Bill.
WEDNESDAY 13 NOVEMBER—Second Reading of the Asylum Bill.
Motion relating to the Social Security (Adjudication) Amendment (No. 2) Regulations.
THURSDAY 14 NOVEMBER—Second Reading of the Coal Industry Bill.
FRIDAY 15 NOVEMBER—Debate on the citizens charter on a motion for the Adjournment of the House.
MONDAY 18 NOVEMBER—Second Reading of the Competition and Service (Utilities) Bill.
It may be for the convenience of the House to know that, subject to the satisfactory progress of business, the House should rise for the Christmas recess not later than Friday 20 December. It may also be for the convenience of the House to know that as Easter day is relatively late, on 19 April, the Easter recess will include the whole of the week beginning Monday 13 April.

Dr. Cunningham: Members and their families will be grateful to the Leader of the House for making the latter announcements. I certainly thank him on behalf of my right hon. and hon. Friends.
Can the Leader of the House confirm that the Competition and Service (Utilities) Bill will be not only given its First Reading tomorrow but printed and published so that we have the traditional two full weekends before the Bill comes before the House for its Second Reading?
Will the Leader of the House confirm that, well before the Maastricht summit, we shall have two days of debate on the important developments in the European Community? Does the Prime Minister intend to speak in that debate, as we believe he should? Can the Leader of the House assure us that the Government will table a substantive motion for that debate which sets out clearly and unambiguously the position of Her Majesty's Government and the details of that position?
Will the Leader of the House think again about the Government's apparent determination to railroad the poll tax No. 2 Bill through the House? May I remind him that the Prime Minister said on radio during the Conservative party leadership election last year that the Government and the House had been bounced into the poll tax because proper consideration and thought were never given to it? The Bill was railroaded through the House; there was never an honest majority for it.
Is it not ridiculous, given the chaos that the Government have caused in local government finance, to repeat that folly with the Bill to replace the poll tax, whose Second Reading will take place next week? I urge the Leader of the House, in the interests not merely of the
Opposition but also of local government and all those responsible for and involved in the provision of services, to think again about how the House will deal with that Bill.
Has the Leader of the House seen the report that I have here—"NHS Reforms: The First Six Months", a survey of directors of public health medicine, which was carried out by Middlesex polytechnic? Is he aware that almost two thirds of directors responding expressed concern for the future well-being of the services and their ability to meet their obligations to patients under the Government's health service reforms? They also expressed anxiety about the future of funding from public expenditure for those services. Will the Leader of the House arrange for the Secretary of State for Health to make a statement in response to the serious matters raised in the report?

Mr. MacGregor: I am grateful to the hon. Gentleman for his opening comments. As he knows, it was in fulfilment of a promise to the House that I would always endeavour to announce the dates of those two recesses as early as possible, because I well understand that that is for the convenience of Members.
It is the intention to publish the Competition and Service (Utilities) Bill tomorrow, as we are anxious to fulfil the commitment of two weekends' notice.
I confirm that I will arrange a two-day debate in advance of the Maastricht summit and that my right hon. Friend the Prime Minister will lead for the Government in that debate. We are considering the form of the debate, but at present we are inclined to have a substantive motion.
On the question of a timetable motion for the Local Government Finance Bill, we are providing two full days for the Second Reading on top of the debate yesterday in the Queen's Speech. In addition, as the hon. Gentleman will see when the timetable motion is published later today, we are giving considerable time for debates in Committee on that Bill. The crucial point is the need for local authorities to have time to introduce the council tax in place of the community charge. That is precisely our desire—to ensure that we get a replacement within the timetable that we have committed ourselves to—and it is important that local authorities have plenty of time to prepare for it. That is why, while giving full time for debates in the House, we are anxious to get on with the Bill with all due speed.
I have not had a chance to look at the NHS document that the hon. Member for Copeland referred to, but it does not seem to me to be an appropriate subject for a statement. The hon. Gentleman will know that we could have debated the health service this week if the Oppositon had so wished; and there will be other opportunities for health service matters to be debated in the House.

Several Hon. Members: ose——

Mr. Speaker: Order. There is great pressure on time today, and I regret that I shall have to put a 10-minute limit on speeches on the last day of debate on the Queen's Speech. I ask for single questions directed to the business for next week and not on wider matters.

Sir John Stokes: In view of the poor coverage in the newspapers of the five-day debate on the Queen's Speech—on some days there was not a line of report even in the so-called quality papers—would my right hon. Friend consider——

Mr. Speaker: Is this to do with business for next week?

Sir John Stokes: Yes. I hope that it will be dealt with immediately, Sir. As a matter of urgency, will my right hon. Friend consider whether the high price of Hansard can be reduced so that the public may read what we are doing here?

Mr. MacGregor: I do not think that that is a matter for me. I believe that an announcement on this matter was made by one of my hon. Friends, but I shall look into it. We endeavour to cover the costs of Hansard. That is why the current move was made.

Mr. James Wallace: The Leader of the House may know that on this Bench we do not have any objection in principle to timetabling legislation from the outset, but think that it should be done only if there has been proper consultation with all the Opposition parties and, indeed, with interests on the Government side. What steps has he taken or does he intend to take before tabling the timetable motion to consult widely throughout the House to ensure that particular matters of contention, including specific provisions relating to Scotland, are given adequate time for debate?

Mr. MacGregor: Consultation is taking place in the usual way, although it is open to hon. Members to make representations. The hon. Gentleman's general point is appropriate for the Committee under the chairmanship of my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), which is looking at various matters affecting sittings and timetables.

Mr. Bob Dunn: Will my right hon. Friend consider rearranging one of next week's debates so that we can have a debate on the Labour party and its history, bearing in mind that its founders were men and women of conviction, determination and principle, none of which we are seeing on the Opposition Benches today? Does he also agree that the only person of principle on the Labour Benches is the right hon. Member for Chesterfield (Mr. Benn), who said the other day,
If we've changed our mind to win, we could change our mind when we've won"?

Mr. MacGregor: I do not want to get too contentious in business questions, but my hon. Friend's point about the fact that the Labour party has changed a large number of its principles and certainly a large number of its policies is one that I make frequently as I travel round the country. The reason is that we have been successful throughout the 1980s in the principles that we have followed and the policies that we have pursued. My hon. Friend's comment about the statement of the right hon. Member for Chesterfield (Mr. Benn) is accurate and needs to be repeated time and again.

Mr. George Foulkes: On a point of order——

Mr. MacGregor: Fortunately, the right hon. Gentleman's prediction will not happen.

Mr. Foulkes: On a point of order——

Mr. MacGregor: What may happen and is possible is to have, not next week——

Mr. Foulkes: Ah.

Mr. MacGregor: —but on some future occasion an opportunity to debate these matters.

Mr. Foulkes: That is better.

Mr. Speaker: Order. I hope that my plea does not fall on deaf ears. We have a heavy day ahead of us.

Mr. Alfred Morris: Is it not morally offensive and a very urgent matter that people who, in order to sustain their breathing, now have to pay not only for nebulisers but also a service charge plus value added tax? Is the Leader of the House aware that people who are poor and chronically ill are now being charged £20 for servicing plus £3·40 VAT? Is that not the first tax ever on breathing? May we have a statement about it next week?

Mr. MacGregor: Statements have already been made. We have made it clear and spelt it out time and again that there can be no charges for national health services except where specifically allowed by statute.

Mr. Richard Tracey: In the light of a continuing series of tragic events arising from hooligans snatching cars for so-called joyriding, can my right hon. Friend give the House any intimation of progress towards legislation, which, I am sure, would be agreed on both sides of the House, to deal with these outrages?

Mr. MacGregor: There is concern on both sides of the House about this matter and I am sure that both sides would agree that joyriding is not the right description. I am glad that my hon. Friend referred to it as "so-called" because it is far from joyriding. We are making good progress on the technical details of the legislation. I can confirm that we shall introduce the Bill as soon as we can.

Mr. Dave Nellist: Will the Leader of the House consider that, in the run-up to next Wednesday's debate on the Asylum Bill, Government Members, particularly Back-Bench Tory Members, and tabloid newspapers will attempt to create an atmosphere to justify the Bill by talking about numbers? Is it not a fact that in 20 of the past 27 years there has been a net outflow of people from this country? In July, the Home Office admitted to me that since 1964 786,000 more people have left Britain than have entered it. When we discuss the Asylum Bill——

Mr. Speaker: Order. Is not that the sort of speech that might be made in a debate? Will the hon. Gentleman ask a question about the debate?

Mr. Nellist: When we discuss the Asylum Bill next Wednesday, will it be in order for me to accuse the Government of playing the pre-election racist card?

Mr. MacGregor: That is an outrageous suggestion, and I refute it entirely. The hon. Gentleman has got it wrong, because the Asylum Bill deals with people seeking political refugee status. It does not deal with immigration generally, or net inflows and outflows. I make that absolutely clear to the hon. Gentleman. The Bill is about political refugees, and we have made it clear that there will be no change in the position of genuine political refugees. We are concerned, however, that the number of applicants for asylum status has risen from 100 a week only three years ago to 1,000 a week. Not all of those are likely to be proved to be genuine political refugees, so it is important that we improve the mechanisms for dealing with the position. The hon. Gentleman should not try to interpret the Bill in any other way.

Mr. Alistair Burt: During next week's debate on the citizens charter, will there be an opportunity to explain to the patients in my constituency why expenditure on the national health service fell by 2 per cent. between 1974 and 1979 and has increased by 20 per cent. since the Government took office?

Mr. MacGregor: I am sure that my hon. Friend is right. I know that he carries out his constituency duties with great devotion on Fridays, but I hope that he will be here to make that point and many others on the citizens charter in relation to the health service.

Mr. Andrew Faulds: Will the right hon. Gentleman make it clear to the Prime Minister that the heritage lobby wants no feminist gesture in any impending and important appointments in the heritage field? Think about it.

Mr. MacGregor: I am sure that there will be no gestures. I do not know what the hon. Gentleman is talking about, but I am sure that the decision will be taken on merit.

Mr. Robert G. Hughes: Will my right hon. Friend arrange a debate next week specifically on local government in our inner cities? If we have such a debate, will the House be able to analyse why there is a peculiar triple achievement in too many councils? A combination of high spending and rotten services has been brought about by Labour councils.

Mr. MacGregor: It will be appropriate for my hon. Friend to raise those points in the two-day debate next week.

Mrs. Margaret Ewing: On the debate to be held on Monday and Tuesday next week, will the Leader of the House advise us on whether the Government will publish additional information on the implications of banding and how it will affect people, in order to assess the level of payment that people will have to make? Is he aware, for example, that we have calculated that the Secretary of State for the Environment, who will lead for the Government on that Bill, will pay considerably less for his sumptuous home in Belgravia—his second or third home—than a first-time buyer in Scotland's Grampian region?

Mr. MacGregor: We have already published a great deal of information on the Bill and have no intention of publishing any more between now and Monday.

Mr. Andrew MacKay: Is my right hon. Friend aware that there is grave concern that we shall not have a debate on Europe until 21 November, because during that time the Opposition's policy may change yet again and we shall not be able to hear why Labour Members are so enthusiastic for a single currency immediately?

Mr. MacGregor: My hon. Friend has in mind the seven changes that have already been made to the Opposition's position. We shall have to wait and see whether another change is made between now and the time that we hold the debate. I cannot absolutely confirm the date of that debate. We hope to hold it on 21 November. However, as I told the Committee chaired by my right hon. Friend the Member for Westmorland and Lonsdale when giving evidence to it earlier this week, when one discusses

business more than one week ahead, it must always be subject to changes that inevitably take place. We intend to hold the debate about 21 November, and my hon. Friend will have to be patient until then.

Mr. George Galloway: May I draw the attention of the Leader of the House to early-day motions Nos. 46 and 47?
[That this House calls upon the Government to establish an inquiry into the circumstances surrounding the events in London in September 1986 in which Mr. Mordechai Vanunu was lured out of London to Italy, whereafter he was drugged, kidnapped and returned to Israel where he is currently serving a lengthy prison sentence in solitary confinement.]
In view of the bizarre and mysterious death in the Atlantic this week of the British publisher, Robert Maxwell, and the claims being made this morning that he may have been murdered, and given the riddle, wrapped in a mystery inside an enigma which the whole issue of the so-called Mirrorgate has now become, will the right hon. Gentleman allow a debate to take place and, in view of the call that has already been made to him—he said that he would give the request consideration—conduct a Government inquiry into the whole issue of Mirrorgate and the sinister and mysterious events?

Mr. MacGregor: Let us be clear about what I said when the matter was raised previously. I said that, if there were any allegations about companies involved in illegal arms sales, it would be right for those to be investigated. But I made it clear that there had to be specific allegations, and then the Department of Trade and Industry would look into them. That is what I said, and I wish to make it perfectly clear.
As for a debate in the House, I feel that in the light of yesterday's tragic incident—others have paid tribute to Mr. Robert Maxwell—I do not think that this would be the right time to discuss the matter.

Mr. Anthony Coombs: Given the increasing perception of the importance of the traditional and rigorous methods of education for improving standards in classrooms, and Government reforms in relation to the national curriculum assessment that is underpinning them, may I ask my right hon. Friend to arrange a debate next week to see what actually goes on in the classroom? We could then, in particular, refer to the desire of the Labour-controlled Manchester city council to introduce an idiotic form of anti-sexism by which it would ban the use of words such as "chairman", "manning the office" and even "master bedroom"? Is that indicative of the kind of non-rigorous standards which too often apply to Labour-controlled local education authorities and which are doing nothing to benefit education standards in this country?

Mr. MacGregor: I share my hon. Friend's views on that subject, and I recall other Labour-controlled councils doing such things in the past. It is a great waste of time, effort and money to pursue such courses. As for raising the matter in the House, we shall soon have the Second Reading of the Education (Schools) Bill, and that will provide an opportunity to raise some of those issues.

Mr. Greville Janner: May we have an early debate on the environmental importance of the planting of national forests such as that which is to be created shortly in Leicestershire? Is the right hon.


Gentleman aware that a local campaign—which rejoices in the name "Stump up for woody fund"—has had to be organised to raise funds for such planting? This matter should not be left to private donations but should be considered by the House as an issue of public concern.

Mr. MacGregor: There will be a debate tomorrow on the environment on the Government's progress report on the previous White Paper when all such matters can be raised and when we shall he making clear the substantial progress, over a wide range of issues of environmental concern, that we have made in the past year.

Mr. John Wilkinson (Ruislip-Northwood): Will my right hon. Friend clarify which Ministers will open and reply to the very significant debate on the citizens charter next Friday? Has he any intention of ensuring that it is well structured and focused debate rather than just a well-intentioned meander?

Mr. MacGregor: I can confirm that the Financial Secretary to the Treasury will open the debate. It will be a well focused debate because there is a great deal of material about which we can talk. It will certainly not be a meander.

Mr. James Lamond: As next Tuesday's business will, in all probability, include the introduction of three new Members wishing to take their places here, may I ask the Leader of the House to arrange for a good turnout of the Cabinet on that occasion to welcome such of the Tory candidates who were able successfully to present Tory party policy to the electorate?

Mr. MacGregor: The hon. Gentleman is making a number of presumptions.

Mr. Tony Favell: Has my right hon. Friend noticed that, during questions this afternoon, there has been no objection from Opposition Members to a substantive motion to conclude the two-day debate on Europe? Does he suspect, as I do, that some of them wish to gag other Opposition Members so that they do not expose the differences of view on the Opposition Benches? Maastricht will determine the way in which the people of this country are governed for decades to come. It is absolutely vital that Members are free to speak unwhipped.

Mr. MacGregor: I do not doubt that there are still substantial divisions on this issue within the Labour party, just as there have been some last-minute conversions.

Mr. David Trimble: In light of the discussions about extending the powers of Select Committees, particularly the suggestion that seems to be emanating from the Government that Select Committees should handle the Committee stage of Bills, does the right hon. Gentleman intend to consult the Ulster Unionist party on that matter, because we have an interest in it?
Does the right hon. Gentleman think that it is wise to hold next Friday's debate on the citizens charter when, despite the importance that the Government attach to it, they have still not managed to publish a charter for the whole United Kingdom?

Mr. MacGregor: We have published a large number of individual charters, and we shall continue to do so.
I do not know where the suggestion about Select Committees dealing with Bills came from, but it did not

come from me and was not in the memorandum that I put before the Select Committee chaired by my right hon. Friend the Member for Westmorland and Lonsdale.

Mr. John Bowis: May I join the shadow Leader of the House in his request for a debate on railroads so that, in light of yesterday's announcements, Conservative Members can highlight the fact that public transport investment under this Government is at the highest level since the Conservative Government of the 1950s, that in London it is three times the level that it was under the Greater London council and 25 per cent. more than in Paris? That would be better than having to listen to more figures being plucked out of the air by the Opposition.

Mr. MacGregor: I agree with my hon. Friend, who has made a good point. If my hon. Friend catches your eye, Mr. Speaker, he can elaborate on that point later today.

Mr. William McKelvey: Being a Scot, is not the Leader of the House ashamed to fail to announce that next week he will move towards the setting up of a Select Committee on Scottish Affairs? Is it part of his master plan to wait until there are no Conservatives north of the border, so that he has a good excuse?

Mr. MacGregor: The hon. Gentleman knows well the position about a Select Committee on Scottish Affairs. He also knows that the Scottish Grand Committee has been meeting during the summer to discuss a whole range of Scottish issues. I am glad that we have been able to get that going again.

Mr. Tony Marlow: When did the House surrender power to the European Community with regard to majority voting on such issues as maternity pay and hours of work? If the House has not surrendered those powers to European institutions by majority voting, can we sort the matter out before we consider surrendering any further powers and being taken for another ride?

Mr. MacGregor: We abstained because we were disputing the treaty base and legal base of the maternity pay issue—the only one that came before the Council yesterday.

Mr. Gerald Bermingham: In the near future, may we have a debate, for which I have asked many times, on the prison population and the prison staffing system, particularly bearing in mind the fact that the first contract has now been awarded to Group 4 in respect of the new Wolds prison? Is it not time that we discussed the issue on the Floor of the House?

Mr. MacGregor: The issue could be raised today.

Mr. James Paice: It would be helpful if my right hon. Friend could say when we will return after Christmas.
Will my right hon. Friend reconsider his rejection of the request of the hon. Member for Copeland (Dr. Cunningham) for a statement on the health service? A statement or a debate would allow us to point out that yesterday's commitment to a further £2·7 billion is more than any previous commitment by the hon. Member for Livingston (Mr. Cook) and is nearly up to the figures being wafted about by the Leader of the Opposition, from which he is now being forced to back down.

Mr. MacGregor: I gave our record on the health service a few moments ago, and I would be happy to elaborate on it. It is possible to elaborate on the public spending aspects of the health service in today's debate. The only reason for not finding time next week is that we have a lot of Bills to be getting on with and that will dominate the programme, as it always does, in the early weeks. I hope that we shall have plenty of opportunities to return to this issue.

Mr. Robert Maclennan: Does the Lord President recall that his predecessor, Lord St. John of Fawsley, led the way in setting up the procedure to enable Bills to be considered by a Committee of the House before being given a Second Reading or being considered in Committee? Did he support that, and if he did will he consider the appropriateness of using the procedure for the Asylum Bill, which has aroused massive opposition from all the bodies that are concerned with refugee and immigration matters? We need to have the facts from them before we consider the Bill in detail.

Mr. MacGregor: The Bill has also aroused considerable support among many people. I remember that procedural experiment. Indeed, one of the Bills that I took through Committee was subjected to it. But to get the real benefit, it must be used for particular types of Bill, and it would not be appropriate for the Asylum Bill.

Mr. Geoffrey Dickens: Will my right hon. Friend find time next week for a debate on overseas trade? A debate would give me an opportunity to draw attention more fully to the plight of three companies in my constituency, one of which has £24 million-worth of contracts in its pocket but the lines of credit to the USSR are not open. The second is having difficulty in getting payment from Turkey, and the third is having a job shipping its goods to Iraq because of United Nations sanctions. My local companies cannot be the only companies in this position. Therefore, a debate would be important.

Mr. MacGregor: These are complex issues and each case is different. I cannot promise my hon. Friend a debate next week, so he will have to find other ways of raising the issue.

Several Hon. Members: rose——

Mr. Speaker: We have a heavy day ahead of us, but I am reluctant to curtail business questions. I shall call the hon. Members who have been rising, provided they are brief. But I hope to get on to the debate by 4.10 pm.

Mr. Tony Banks: Provided the Prime Minister will stay in the country long enough next week, may we expect a statement from him giving his pathetic, cringing, whingeing reasons why the Conservative party lost all three by-elections today, or does the Leader of the House expect the Tories to win one of them?

Mr. MacGregor: Those matters are entirely hypothetical. Therefore, I shall not comment on the question of a statement because it does not arise.

Mr. Jimmy Wray: Will the Minister allow time to debate the report of Dr. Forwell of the Greater Glasgow health board, which highlights the dire poverty in the Greater Glasgow area?

Mr. MacGregor: Not next week.

Mr. Thomas Graham: Is the Leader of the House aware that an inquiry is being held into toll increases on the Erskine toll bridge? Recent press reports state that the Secretary of State will privatise the toll bridge, sack its 32 workers and employ a private company. Will the right hon. Gentleman ask the Secretary of State to make a statement showing whether the public are wasting their time by attending the inquiry and whether all the money that was spent on setting it up has been wasted? My constituents' time is being wasted by the facade of an inquiry, because at the end of the day the Secretary of State will abolish the right of local people to have a say by privatising the bridge.

Mr. MacGregor: I shall put that point to my right hon. Friend the Secretary of State. I am sure that he will have a satisfactory answer.

Mr. Terry Lewis: Does the Lord President recall that, when the Prime Minister was a Social Security Minister, he announced the closure of the DHSS resettlement centres but assured the House that replacement beds in the private and voluntary sectors would be available for those who were displaced? Will he take it from me that, when the resettlement centres finally close next March, those replacement beds will not be ready? What is to be done, and may we have a debate in the House?

Mr. MacGregor: I cannot fit in a debate next week, and I have already mentioned the pressures on parliamentary time in the next few weeks. We have a full legislative programme—not only all the Second Reading debates but the two-day debate on European issues. I shall draw the hon. Gentleman's point to the attention of my right hon. Friend the Secretary of State.

Mr. Ron Brown: Is it not clear that, in terms of the health service, most people have had their chips, particularly in the Lothian region, where the local health board is trying to set up a deal with Reo Stakis in order to produce the promised new hospital, which should have been resourced under the health service? Is this not disgraceful? Is this not backdoor privatisation? Should we not have a debate next week to discuss it?

Mr. MacGregor: I am not aware of that issue, but there is not time for a debate on it next week.

Mr. David Winnick: Given the continued financial speculation about the Maxwell business concerns, will we have a statement next week if, despite denials, the Daily Mirror is up for sale? Does the right hon. Gentleman recognise that it would be totally unacceptable for that newspaper to go into the hands of those who already have substantial press holdings? It is wrong that so many newspapers throughout the nation are owned by so few people. Indeed, that in itself should be the subject of an early debate.

Mr. MacGregor: As I think the hon. Gentleman recognises, he is raising hypothetical questions. All that I can say is that I have noted what he has said.

Mr. Paul Flynn: In the interests of the citizen's right to information, will the right hon. Gentleman ensure that next Friday we have a statement on the furious row which is going on in secret between


Nuclear Electric and the nuclear installations inspectorate on the safety of Magnox reactors, particularly Trawsfynydd reactor No. 1? Problems discovered with the outlet valves which have caused embrittlement and corrosion could lead to a sudden collapse of the core because of pressure and could eventually result in ignition of the graphite and fuel in the core. This is an important matter because it affects three other Magnox reactors, and it should be publicly debated.

Mr. MacGregor: I shall look into the point with my right hon. Friend the Secretary of State for Energy. As I am sure the hon. Gentleman recognises, because I do not know the details of any issue that may arise, I cannot promise a statement.

Mr. Peter Hain: Will the Leader of the House find time next week for a Government debate on cot deaths? There are more than 2,000 cot deaths a year throughout Britain. Recent evidence from New Zealand shows that, when the New Zealand Government mounted a nationwide television and publicity campaign advising mothers to put their children to sleep on their backs or sides, not to smoke and to breast-feed, the number of cot deaths was cut by half. Although the British Government accept that evidence, they have refused to fund a nationwide publicity campaign. Five children in Britain may die today in that way. yet their mothers and fathers are ignorant of that evidence. Why are not the Government acting urgently to publicise that information?

Mr. MacGregor: I am sure that we all share the hon. Gentleman's anxiety about cot deaths. His point about publicity and advertising could be raised in a variety of ways in the House, but I shall draw it to the attention of my right hon. Friend the Secretary of State for Health.

Mr. Bob Cryer: May we have a statement next week on the Bradford hospital trust, which is deeply in debt, has lost 300 jobs, closed a baby unit in St. Luke's hospital and is now in crisis because the chief executive, Dr. Mark Baker, is resigning and moving elsewhere before the whole thing tumbles down around his head? May we have an urgent statement about the absurd policy which brought a crisis to Bradford hospitals and a diminution of service to the people?

Mr. MacGregor: We have had opportunities for many debates on and questions about trust hospitals, and there will be other opportunities for the hon. Gentleman to raise points about that matter.

Mr. Dennis Skinner: Why does not the Leader of the House throw his weight about with the Minister of Agriculture, Fisheries and Food? I have asked the Minister about half a dozen times to make a statement on dioxin in Bolsover and contaminated milk. Now he knows that Bolsover Coalite will close its incinerator at the end of the month. It will be revealed today in a television programme that there is a cluster of breast cancers among women in the area where the dioxin was found—50 per cent. more than in other parts of Derbyshire. Contamination levels in the River Doe Lea are 1,000 times higher than the appropriate safety levels. It is high time that a statement was made. The Leader of the House should tell the Minister of Agriculture, Fisheries and Food to make one so that he can be cross-examined.

Mr. MacGregor: I have of course raised the issue with my right hon. Friend the Minister of Agriculture, Fisheries and Food, because the hon. Gentleman has raised it before. As the hon. Gentleman knows, the problem involves three farms, and since the statement was made to the House last June, a detailed research programme on the affected and neighbouring farms is being undertaken by the Ministry of Agriculture, Fisheries and Food. Tests are also being undertaken by Her Majesty's inspectorate of pollution. The results of the initial testing by the Ministry of Agriculture, Fisheries and Food's programme were published on 2 October.
However, the analytical work is complex and time-consuming, and the results of the research programme are unlikely to be available before the new year. I assure the hon. Gentleman that they will be published as soon as the work is completed. It is obviously complex work, but I assure him that the results will be published as soon as the work is done.

Mr. Brian Wilson: Do the Government intend to debate the MORI report commissioned by the Department of Social Security to investigate the plight of 16 and 17-year-olds as a result of the Government's decision to deprive them of the right to benefit, in view of the fact that that policy, which I regard as probably one of the cruellest and most irresponsible pursued by this or any other Government, was the personal work of the present Prime Minister? In view of the fact that the MORI report commissioned by the Government found that decision to be the major cause of destitution among young people, is it not appropriate to debate it? As it is a Government report commissioned at considerable expense, would it not be an extraordinary waste of public money if the report were not debated in the House so that its terrible findings might be acted upon?

Mr. MacGregor: I have not especially studied the report, but, as I have said, Government time in the next few weeks is very short. Clearly other opportunities are available to hon. Members to raise such issues if they wish to do so.

Prime Minister

Mr. George Foulkes (Carrick, Cummock and Doon Valley): On a point of order, Mr. Speaker. Is it within your power to draw the Prime Minister's attention to the fact that his first responsibility is to the House of Commons, that there is a Prime Minister's Question Time every Tuesday and Thursday and that we have a Foreign Secretary and a Secretary of State for Defence who are quite able to deal with international and defence commitments overseas? The Prime Minister should be here at Prime Minister's Question Time—or is he afraid of the Leader of the Opposition?

Mr. Speaker: That is patently not a point of order for me.

Mr. Foulkes: But it is.

Mr. Speaker: Of course the House of Commons is important, but the interests of the nation are equally important.

The Lord President of the Council and Leader of the House of Commons (Mr. John MacGregor): Further to that point of order, Mr. Speaker. It is right to say to the House and to the nation that the Prime Minister is presently with the President of the United States and the Heads of State of most European Governments and others. They are discussing important matters which affect the future defence not only of this country but of the western world. I think that the vast majority of the nation would expect my right hon. Friend to be there with the other leaders.

Statutory Instruments, &c.

Mr. Speaker: With permission, I will put together the Questions on the statutory instruments.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &amp;c.).

That the draft Building Societies Act 1986 (Modifications) (No. 2) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.

That the draft Disability Living Allowance and Disability Working Allowance (Northern Ireland Consequential Amendments) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.

That the draft Merchant Shipping (Prevention of Oil Pollution) (Amendment) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.

That the Students' Allowances (Scotland) Regulations 1991 (S.I., 1991, No. 1522) be referred to a Standing Committee on Statutory Instruments, &c.

That the Bathing Waters (Classification) (Scotland) Regulations 1991 (S.I., 1991, No. 1609) be referred to a Standing Committee on Statutory Instruments, &c.

That the Testing in Primary Schools (Scotland) Amendment Regulations 1991 (S.I., 1991, No. 1682) be referred to a Standing Committee on Statutory Instruments, &c.

That the Child Minding and Day Care (Registration and Inspection Fees) Regulations 1991 (S.I., 1991, No. 2076) be referred to a Standing Committee on Statutory Instruments, &c.

That the Immigration (Carriers' Liability Prescribed Sum) Order 1991 (S.I., 1991, No. 1497) be referred to a Standing Committee on Statutory Instruments, &c.

That the Family Credit (General) Amendment Regulations 1991 (S.I., 1991, No. 1520) be referred to a Standing Committee on Statutory Instruments, &c.—Mr. Neil Hamilton.]

Question agreed to.

Orders of the Day — Debate on the Address

Order read for resuming adjourned debate on Question [31 October].

Most Gracious Sovereign,

We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Peter Walker].

Question again proposed.

The Economy

Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition and also, for a Division only, the amendment in the name of the leader of the Liberal Democrat party.
In view of the pressure of time, I shall have to limit speeches to 10 minutes between 7 o'clock and 9 o'clock. I hope that the hon. Members who are fortunate enough to be called before will bear in mind that limit in fairness to their colleagues.

Mr. John Smith: I beg to move, at the end of the Question, to add:
But humbly regret that the Gracious Speech seeks to continue economic policies which have caused a deep and damaging recession, falling output and investment, rising unemployment and record levels of business failures and house repossessions; and call upon the Government to adopt a programme for recovery which will encourage investment and rising levels of employment by the promotion of sustained investment in the manufacturing sector, by encouraging industrial innovation through the application of science and technology and by fully exploiting the potential of the neglected regions through vigorous regional policies, and by providing new opportunities in education and training which are crucial to Britain's economic recovery and future prosperity.
Once again, in his autumn statement yesterday, the Chancellor of the Exchequer was forecasting an economic upturn. There is, of course, nothing new in that. Month after month, as the British economy has languished in a deep and damaging recession, the only reaction from a puzzled and beleaguered Government is the claim that it is not as bad as it seems and that good times are round the corner.
Right from the beginning, it was even denied that there was a recession at all. At the time of last year's autumn statement, both the Prime Minister and the Chancellor of the Exchequer were deeply involved in just such an exercise. When it could no longer be denied that there was a recession, the Chancellor retreated to his second line of defence. He told the Treasury and Civil Service Select Committee that the recession would be "shallow and short-lived". As we know, however, from the evidence contained in yesterday's autumn statement, the recession has been deeply damaging to Britain's economy.
In 1991, growth disappeared, falling to minus 2 per cent., instead of taking the upward direction predicted by the Prime Minister when he was Chancellor, only 12 months ago. Fixed investment has collapsed by almost 11


per cent. Manufacturing investment has fallen by almost 20 per cent. Manufacturing output is expected to decline by 4·25 per cent. this year.
No one could possibly pretend that this debilitating economic experience was, or is, shallow or short-lived. But never a word of apology, let alone a word of explanation, ever comes from Ministers whose incompetence has caused Britain to be at the bottom of the league tables among the leading industrial nations: bottom of the league for growth, bottom of the league for investment, bottom of the league for job creation. Not a word of apology, or even of explanation, to those who have suffered the consequences of their mismanagement of the economy—those who owned and worked in the 45,000 business enterprises that failed this year, with 860 failing in every week of the year, and the 85,000 families who have lost their homes as a result of the record level of repossessions, running now at 1,635 every week.

Mr. Conal Gregory: Will the right hon. and learned Gentleman also confirm that this Government have achieved the highest fall in inflation of any country in the European Community?

Mr. Smith: But it was a fall from a very high level of inflation. In case the hon. Gentleman's purpose is to divert me from the consequences of the recession, let me remind him that I was referring to the 85,000 families who have lost their homes.
Most of all, however, one should have regard for the 750,000 people who have lost their jobs since last year's autumn statement, which blithely proceeded on the wholly mistaken assumption that there would be no increase in unemployment. Once again—as the Chancellor revealed in a reply yesterday to my hon. Friend the Member for Durham, North (Mr. Radice)—the Government are assuming, in this year's autumn statement, that there will be no rise at all in unemployment in the year ahead. Frankly, no one should take that seriously. None of the economic commentators who the Chancellor claims agree with him in his assessment is prepared to go along with that assumption. That is an error right at the heart of all the calculations in the autumn statement, just as it was an error right at the heart of all the calculations in last year's autumn statement.

Mr. Tony Marlow: The right hon. and learned Gentleman says that he is concerned about unemployment. We accept that he is concerned about unemployment, but he knows—although I am sure he will not admit it—that if the heavens were to fall in and there were to be the return of a Labour Government, there would be the mother and father of a financial crisis. In those circumstances, what would the right hon. and learned Gentleman do? Would he increase interest rates and abort the recovery? Would he devalue the pound and embark upon another cycle of inflation? Or would he—the only other alternative available to him—cut the necessary expenditure on sensible and sensitive issues like the national health service? What would he do?

Mr. Smith: My concern about unemployment is so generous that I am prepared to consider the future of the hon. Gentleman, who I think is going to be unemployed a little sooner than he thinks. He is one of those who are arguing for the general election to be delayed for a personal reason. What I shall be concerned about in the

economic policies that I shall follow will be to seek to rescue this country from the financial consequences of this Government's period in office. The next Labour Government will not have a fortunate inheritance, but the hon. Gentleman cannot blame Opposition Members for that. The Conservatives have been in power for 12 years; it is a little late for the hon. Gentleman to notice the problem.
The price of the recession has been and remains high in economic, political and human terms. After all, this is the second worst recession since the second world war, exceeded in severity only by the recession in the early part of the Government's period in office. Neither the Government nor the hon. Member for Northampton, North (Mr. Marlow) should be under any illusions that the public may be in an easily forgiving mood.
Indeed, I notice that one business man is so furious and frustrated with the Government's economic mismanagement and its effects on his business and livelihood that he is suing the Treasury in the High Court. As was reported in the Financial Times on 1 October, the Government sought to have the action struck out before the High Court, but the motion failed and the case appears to be proceeding.
The plaintiff is a Mr. Mark Harries, a Cardiff business man. He accuses the Government of, among other things, the following errors:
Selling valuable public industries, such as water and the telephone service, at one quarter of their worth".
[HON. MEMBERS: "Guilty."] Mr. Harries has a strong case, as the House will realise as I proceed through his pleadings. The other charges are:
Creating a false economy in the 1980s and causing property prices to inflate at a time when he purchased four properties on mortgage;
Not keeping proper control over the Bank of England, so that interest rates almost doubled and he had difficulty keeping up payments on his mortgage loans;
Creating an economic climate in which demand for properties diminished dramatically, so that he was deprived of his collateral and was unable to borrow more money…or diversify into other business;
Causing continual and increasing unemployment which deprived him of enough customers with money to use his services;
Causing him great emotional stress owing to the danger of total business failure and subsequent 'unemployment, penury and destitution'".
These views are wholly objective:
Mr. Harries says that he has no political affiliations and no personal animosity towards the government or any of its members.
In saying so, he shows himself a man of great generosity as well.
I remind Treasury Ministers that the case is still proceeding and they may have to give evidence at some stage. After the initial hearing, Mr. Harries said:
We are prepared to go the whole way to win the point. It will cost thousands of pounds, but it's a matter of principle. You can forgive the odd one or two mistakes, but you can't forgive mistake after mistake, blunders all the time.
How true.
The case will be interesting. I shall be fascinated to see what defences the Government produce to Mr. Harries's case. I must confess that I would not mind presenting the case in the High Court myself, even though I see some potential problems. Too many witnesses will probably want to give evidence against the Government. Those


could include the 45,000 businesses that have gone under this year, let alone the 85,000 families who have lost their homes and the 750,000 extra unemployed people.
I wondered whether the Chancellor had remembered that litigation when he presented the autumn statement yesterday, for that could provide useful material for the plaintiff and his advisers. After all, it revealed how much of a confidence trick last year's autumn statement was. When he speaks today, the Chancellor should have a care not to undermine further the Treasury's case for the defence.
I have in mind some of the misleading answers that the right hon. Gentleman gave to questions following his statement yesterday. The House may recollect an exchange that took place between my hon. Friend the Member for Neath (Mr. Hain) and the Chancellor during questions on the autumn statement yesterday. My hon. Friend asked the right hon. Gentleman about the Government's prospective intentions to increase VAT, and asked him to answer the question yes or no. A similar matter was canvassed on the "Today" programme on Radio 4 this morning. In reply to my hon. Friend's allegation, the Chancellor said:
The hon. Gentleman is totally wrong",
and went on to give us this pearl of wisdom:
One can increase spending and cut taxes at the same time. I do not know where the hon. Gentleman has been—he has not been in this House very long—but we have been doing that ever since 1979."—[Official Report, 6 November 1991; Vol. 198, c. 468.]
That is simply not true. The Government have not been cutting taxes since 1979. In fact, it is not a matter of dispute between hon. Members on each side of the House that the proportion of national income going in taxation has risen—from 34·25 per cent. in 1979 to 37·75 per cent. in 1991. How can the Chancellor have been cutting taxes since 1979? When the Chancellor was taxed with the matter this morning, he said that the Government had been cutting taxes since the early 1980s. That is the oldest trick in the book.
The Government get into power in 1979. They increased national insurance contributions by 2·5 per cent.—[HON. MEMBERS: "Come off it."] They do not like to hear this: they hope that the public have forgotten all this. The Government increased national insurance contributions by 2·5 per cent., which is almost the direct equivalent of 2½p on the standard rate of income tax: to most people, it means much the same thing. The Government then almost doubled VAT, from 8 to 15 per cent. Although they had said in the election campaign that the Labour charge that they would double VAT was deplorable gutter politics, they did it within a couple of weeks of getting into power.

Mr. David Ashby: Will the right hon. and learned Gentleman give way?

Mr. Smith: Before the hon. Gentleman leaps to his feet, I should just like to finish my point.
The change in the proportion of income going in taxation since 1981 is quite different from the change since 1979, and to use 1981 as the starting point is conveniently to leave out the years in which taxes were actually increased. The House and the nation need to be treated

somewhat more seriously than the Chancellor has been treating us. We are not as gullible as all that.

Mr. Ashby: Will the right hon. and learned Gentleman say by how much he would increase taxation were a Labour Government to get into power?

Mr. Smith: We believe that we need to introduce a much fairer system of income tax, and we have spoken about that on many occasions. [HON. MEMBERS: "How much?"] The proposals are well understood by the public.

Mr. Ian Taylor: The right hon. and learned Gentleman says that he will increase public expenditure—presumably over and above the increases announced yesterday. To finance such a move, he will have to have recourse to higher taxation or higher borrowing and interest rates. By how much will taxation be increased? How much more will the basic rate taxpayer have to pay under his Government?

Mr. Smith: The hon. Gentleman completely fails to take account of how much of yesterday's public expenditure increase was committed to the costs of recession—about £4 billion of that money was committed to such costs. The answer to his question is that, if we run an economic policy that does not lead us into recession, we shall have the resources to increase public expenditure.
Despite the Government's recent experience, they appear to have learnt very little. Once again, when they talk about the future of the economy, they advance a case based on bogus reassurances about sustained and successful recovery. It is the same technique as they have used month after month, as the recession has deepened and spread through all parts of the economy and all parts of the nation. In June, the Chancellor detected what he chose to call "vague stirrings" of recovery, which he thought would first manifest themselves in the housing market. He told David Frost on his morning programme, "The signs are there."
Hon. Members will recall that in an earlier debate I referred to the robust rubbishing of that proposition by the president of the House-Builders Federation, Mr. Upsall. When Mr. Upsall heard about these "vague stirrings", particularly in the housing market, he wrote to the Chancellor the following day:
I have consulted widely within the housebuilding industry and there is no foundation whatsoever for your assertion.
In case the Chancellor believes that that is the only evidence that I am going to introduce on that point, I noticed that, undeterred by the Chancellor's experience of being rubbished by the president of the very industry on which he was commenting, the Secretary of State for the Environment, that bold gentleman, claimed only this week that recovery was evident in the housing market. In The Guardian on 5 November, he claimed that the evidence of housing starts
powerfully reinforce the Chancellor's message.
He went on to say:
They herald renewed hope for all those anxious to move house. Britain is pulling out of recession.
However, the House-Builders Federation was once again alert to the Government's claims. I am glad that it pays such close attention to Ministers' comments. The federation represents builders accounting for 70 per cent. of national output. Again on 5 November in The Guardian,


Mr. Roger Humber, a director of the federation, gave an equally sharp response. He said "Rubbish" to the Secretary of State for the Environment. He also said:
Customer confidence is falling, house sales are weakening, and confidence is clearly undermined by rising unemployment.
So much for the "vague stirrings" that we were promised last June.
In support of the case made by the House-Builders Federation, house prices fell for the third month in succession in September. According to the Halifax building society, there is no sign of an early recovery. The latest figures for mortgage lending issued by the Building Societies Association show a further decline in September.

Mr. Dennis Skinner: I am pleased that my right hon. and learned Friend has referred to the housing market. The situation has become so bad that the ex-Prime Minister has her house in Dulwich on the market and she has had to cut its price twice. According to the newspapers, she has now resorted to placing it in the Evening Standard's small ads in an attempt to sell it.

Mr. Smith: My hon. Friend's kindness takes me aback. His generosity is as great as his perspicacity, and I am grateful to him for drawing that point to my attention.
One of the executives of the Building Societies Association told The Financial Times on 24 October:
There is normally a clear upturn in the market when people return from holiday at the end of August, but there has been absolutely no indication of any renewed activity this autumn.
As the Chancellor's "vague stirrings" seemed to lack persuasive power, he has taken to gardening metaphors. In Blackpool he claimed to have detected "green shoots" of recovery. Against that background of blinding blue, he saw some green shoots of recovery.
I had the pleasure of listening to the Chancellor at the Guildhall. On that occasion, he talked about being
on the road to recovery
on the basis of a claim that retail sales were on an upward trend. Unfortunately for the Chancellor, Sir Ian Maclaurin of Tesco was in the audience. Immediately after that speech, he pointed out on "Newsnight" that that was not the case. He said that there was no rise in the trend in retail sales—[Interruption.] I do not think that the Chancellor heard what Sir Ian Maclaurin said, but I did. I took part in that programme. He said that he worked in the industry, was in the retail trade and, I believe, is a chairman of one of the federations. He denied what the Chancellor had said.

The Chancellor of the Exchequer (Mr. Norman Lamont): I rushed back from Mansion House especially to hear the right hon. and learned Member for Monklands, East (Mr. Smith), because I am always entertained by his interventions. Sir Ian Maclaurin made it clear that he was talking about grocery sales. Will the right hon. and learned Gentleman tell us whether retail sales over the past three months were higher than in the previous three months, and were they higher than retail sales in the first three months of the year?

Mr. Smith: I am glad that the Chancellor raised that point. I have the retail sales figures in September issued by the Central Statistical Office—[HoN. MEMBERS: "Answer the question."] I am entitled to produce the evidence. The Chancellor's case was that retail sales were on a rising trend. Let us consider the figures. In July, they were 120·8;

they fell in August to 119·3 and were unchanged at 119·3 in September. During the immediately preceding three months the trend was downwards—from July to September—not upwards. Perhaps even more significantly, the trend was down in September 1991 as against September 1990. How on earth can it be claimed that there is a rising trend when, over the past three months, it has been going downwards and is lower than it was a year ago?
Only yesterday, the Society of Motor Manufacturers and Traders published the most recent figures on car sales. Almost unbelievably, in October, the sale of new cars was down by 22·5 per cent. on the same month last year. That reversed the trend of the previous three months when the rate of decline and demand had begun to ease. The motoring correspondent of the Financial Times gives his opinion today:
The sharp drop in sales appears to confirm industry fears that the intense marketing campaigns of recent months served merely to pull sales forward from the final quarter.
Vauxhall said that there was
no sign of an end to the current sales slump.
Those worrying trends in the car industry come on top of the latest manufacturing output figures, which show a drop of 1·1 per cent., and a 2·7 per cent. fall in engineering output.
Having failed to produce very much in the way of facts for his Guildhall audience, the Chancellor hit on a new theme. The vital ingredient, he said, was confidence. With perhaps unconscious irony, he said:
Confidence doesn't come from politicians' speeches.
How certainly true that is, particulary of this discredited and incompetent Administration, who specialise not in creating by their policies a basis for real confidence about our economy but in the year-in, year-out peddling of worn-out and increasingly unconvincing confidence tricks. What could be the basis for confidence would be an investment-led recovery from recession. That is exactly what the Government are not achieving. Although the Government forecast an extremely weak recovery in fixed investment last year—in the autumn statement, it was predicted to be 1·25 per cent.—we know from experience and from comparing last year's autumn statement with this year's that we should not accept Government predictions uncritically.
Since we heard the Chancellor on the radio this morning claiming that one should accept his forecasts because other forecasters agree with him, we should look at what other forecasters predict for fixed investment in 1992. The Chancellor says—

Sir Peter Tapsell: Will the right hon. and learned Gentleman give way?

Mr. Smith: If the hon. Gentleman will allow me, I am, as he must know, in the middle of giving some statistics.
A range of other forecasters—[Interruption.] I am very good at giving way. Conservative Members cannot complain. I have given way to every hon. Member who asked me to give way. I shall give way to the hon. Member for East Lindsey (Sir P. Tapsell), who is quite happy to wait for me to finish the part I am dealing with, and if he could nod to the unruly members of the Cabinet on the Government Front Bench and ask them to cool it a little, I will get round to him all the more quickly.
Plus 1·75 per cent., says the Chancellor. The IMF forecast minus 2 per cent., the CBI minus 2·3 per cent., the London business school minus 1·9 per cent., Phillips and


Drew minus 2·4 per cent., Greenwell Montague minus 2·5 per cent., NatWest bank minus 2·7 per cent., Shearson Lehman minus 2·1 per cent. [Interrupton.] They are all out of step except our Norman when it comes to those predictions. Even more ominously, both the CBI and the National Institute of Economic and Social Research forecast manufacturing investment to fall next year by between 8 and 9 per cent. Of course, that fall is after taking account of the precipitous decline in manufacturing investment this year.

Sir Peter Tapsell: As the right hon. and learned Gentleman is making, as he is fully entitled to do, a most interesting tour d'horizon of the economic scene, what does he criticise, if anything, in the autumn statement? In particular, does he think that the Government should have announced further increases in expenditure for 1991–92 above those that were announced yesterday?

Mr. Smith: I do not want to be discourteous to the hon. Gentleman, but I spent some time criticising precisely those matters when we discussed the autumn statement yesterday.
I should, however, like to make one relevant point on that matter. One substantial omission from the autumn statement was the Government's failure to increase investment in industry and training. There is no question about that. The Government talk about priority areas, but as soon as one identifies a priority area, one also identifies non-priority areas and, sad to say, the Government's non-priority areas include industry and training. What really needs to be done—[Interruption.] The Government should finally realise—[Interruption.] This is relevant to my response to the hon. Member for East Lindsey.
The Government should finally realise the importance of the manufacturing sector to the British economy. I suspect that the hon. Gentleman would agree with Opposition Members when we emphasise the fact that manufacturing is the basic wealth creator for our economy and our society. It is also—this should concern the Government, who are predicting a deterioration in our balance of payments—the indispensable, internationally tradeable part of our economy.
As we face the challenges of the single market after 1992, which are coming nearer by the day, the Government should realise that Britain will remain at the bottom of the economic league unless we consciously stimulate sustained investment in manufacturing and promote science and technology, so that our economy operates at the leading edge of innovation and produces new products, and unless we embark on a skills revolution to mobilise the undeveloped skills of our people, especially our young people, for the benefit of our economy and society.
The Queen's Speech does not show a proper appreciation of the deadly damage that has been done to our economy by a Government who are now running out of time, just as they have already run out of ideas. As Mr. Harries, that determined plaintiff to whose action I wish every success as he proceeds with it in the High Court, reminded us,
You can forgive the odd one or two mistakes, but you can't forgive mistake after mistake, blunders all the time.
No matter how long the Government seek to delay the election, that will remain the judgment of the electorate.

The Chancellor of the Exchequer (Mr. Norman Lamont): I apologise to the House because I have been caught by surprise. I thought that the right hon. and learned Member for Monklands, East (Mr. Smith) was just beginning his attack on the Government.
The right hon. and learned Gentleman devoted a certain amount of time to the economic forecast, but it must have been quite clear to my right hon. and hon. Friends that what really upset the right hon. and learned Gentleman about the forecast that I published yesterday was that it is good news for the economy and therefore bad news for the Labour party. It shows that we are on track for recovery, and that recovery will gather momentum next year.
The right hon. and learned Gentleman also talked about the forecast that was made at this time last year, when we said that we would make dramatic progress on inflation. He has not told the House his view of that forecast on inflation. When we said at this time last year that we would get inflation down to 4 per cent., the right hon. and learned Gentleman scoffed, but that forecast has been vindicated. Today, inflation is 4·1 per cent. and it is set to fall further. With unit labour costs actually falling, underlying inflation will continue to fall throughout next year. As I have made clear, inflation according to the retail prices index may rise a little early next year as special factors, especially mortgage interest payments, drop out of the calculation before falling back again to 4 per cent. by the end of 1992. Factory gate inflation will be at its lowest level since the 1960s. That is the measure of our considerable achievement.
I do not think that the right hon. Gentleman mentioned inflation but, unlike him, we have never wavered from the view that the defeat of inflation is a necessary condition for growth and economic success. Unlike the right hon. and learned Gentleman, we have never flinched from the measures that are necessary to deal with opposition—[Interruption.]—to deal with inflation—[Horn. MEMBERS: "Ah."] we have never flinched from the measures that are necessary to deal with both of them. The story of the past year has been about the dramatic progress that we have made and the lack of support and the lack of determination to defeat inflation that has been evident from the Opposition.
As inflation has fallen, we have cut interest rates, but after each of those cuts, the right hon. and learned Gentleman for Monklands, East has leapt to his feet, rushed to the television studios and demanded another cut, another 1 per cent. As one of the newspapers said, he is "Mr. One Per Cent." Whatever the level of interest rates, the right hon. and learned Gentleman thinks that they should be lower. He was at it again the other day immediately after the Mansion House speech when he said that, if he were Chancellor, he would hope to cut interest rates "quite quickly". The truth is that, if he were ever to become Chancellor of the Exchequer, the only thing that he would do "quite quickly", would be to put up interest rates. He would have to do that. "Mr. One Per Cent." cut would become "Mr. One Per Cent." rise.
The right hon. and learned Gentleman does not understand that it is precisely because our approach has been prudent that our interest rate cuts have been sustained. As a result, businesses and the foreign exchange


markets have realised that we are on course for stable and lasting low inflation. That is, and will continue to be, the achievement of this Government.

Mr. Robert Sheldon: If those changes have been the consequence of prudence, what has been the cause of the rising levels of interest rates that we have seen in the past two years?

Mr. Lamont: The right hon. Gentleman knows well that we increased interest rates, and that we did not flinch from doing so, to deal with inflation. That has been the main object of our policy and it is the basis for achieving growth again. It is because I can reply to the right hon. Gentleman in that way that the markets have confidence in us. They know that we will stick to the policies that are needed. That is why confidence in our prospects is beginning to show through.
The right hon. and learned Member for Monklands, East ridiculed the latest CBI survey that showed that business optimism is at its highest level for three years. He did the same thing the other night on television, but if the right hon. and learned Gentleman had done his homework, he would know that that survey has a well established track record as an excellent predictor of output.
In addition. the rate of growth of narrow money—another good indicator of GDP—is now above the centre of its target range. Export optimism and output expectations are up. Manufacturing output, exports and retail sales—I shall come to the right hon. and learned Gentleman's point on retail sales in a moment—have all increased in the past three months compared with the previous three. There is every reason to believe that we are emerging from recession.
The whole House will have heard what the right hon. and learned Gentleman said about retail sales. The facts are that, in the last three months for which there are published figures—July, August and September—retail sales are up 0·5 per cent. on the previous three months—[Interruption.]—0·5 per cent. was what I said—[Interruption.]—on April. May and June. In the three months to September, the index was 119·8 compared with 119·1 for the three months to June. I ask the right hon. and learned Gentleman to withdraw his earlier remarks, which were quite wrong.

Mr. John Smith: I ask the Chancellor to explain why, if this is a recovery, the figures are down 0·5 per cent. on the same period last year.

Mr. Lamont: The right hon. and learned Gentleman knows perfectly well that I was making the point that retail sales are beginning to recover from their low point. The whole House will have observed that the right hon. and learned Gentleman did not only misrepresent the facts, but sought to misrepresent the views of the other people on that television programme.

Mr. Smith: In that case, and if it is a rising trend, will the Chancellor explain why the figure in September—[Interruption.] I am sorry, I mean July. Will the Chancellor explain why the figure for July is higher than the figures for August and September? [Interruption.] Perhaps the House will listen for a moment because this is an important point which is crucial to the Chancellor's case. How can there be a rising trend when the July figure drops in August and drops again in September?

Mr. Lamont: The right hon. and learned Gentleman is being absurd. He takes one month's figure and says that—[Interruption.] No. The right hon. and learned Gentleman is utterly absurd. I quoted the figures to the House. The House heard the figures and heard clearly that the level of retail sales for the past three months is up on the previous three months. It is also higher than for the first three months of this year. I ask the House whether in its opinion that is or is not the beginning of a trend.

Mr. Geoffrey Dickens: Does my right hon. Friend concede that his autumn statement yesterday and his remarks today in the House have been so well received by the City, the confidence of which we must always maintain, that shares are rapidly rising today? That is how confident the City is.

Mr. Lamont: I am glad to have that up-to-date and welcome news from my hon. Friend.
The second half of this year will see a modest rise in output, just as I predicted in the Budget. I forecast that in 1992 the economy will grow by about 2·25 per cent. That is a cautious forecast. It is a realistic one. It is similar to that made by the London business school, the National Institute of Economic and Social Research, the International Monetary Fund and, indeed, the majority of City forecasters, contrary to what the right hon. and learned Gentleman sought to imply.

Mr. D. N. Campbell-Savours: Repeatedly in recent months, the Chancellor has gone on television and tried to assure the British people that manufacturing output was rising. Yesterday, he said:
manufacturing output may also now be picking up".—[Official Report, 6 November 1991; Vol. 198, c. 452.]
Why is he changing his position? Why was it "may" yesterday when he was sure that manufacturing output was rising only a few weeks ago?

Mr. Lamont: The hon. Gentleman is mistaken. Manufacturing output for the past three months is higher than that for the previous three months, as is industrial production. I was referring to total output in the whole economy, for which we do not yet have the figures.
As the impact of the interest rate cuts that we have made continue to feed through to demand, the recovery will gather momentum. We predict that the increase in output from the second half of this year to the second half of next year will be 2·75 per cent. In 1992 exports will rise by about 6 per cent., manufacturing output will rise by about 3·25 per cent.—the right hon. and learned Gentleman professed to be interested in manufacturing—and domestic demand will rise by about 3 per cent.
Of course, the right hon. and learned Gentleman does not want to know. He has to distort the figures. He does not believe in recovery. He does not want a recovery. He is terrified that there will be a recovery. That is why he and some of his hon. Friends have sought on television and in the House to say that we shall be in recession until investment starts to rise and unemployment starts to fall. That is their definition of recession, and it is an interesting one. Business investment was falling during half the term of office of the last Labour Government, and unemployment was rising for four years out of five. So under that definition, the economy was in almost permanent recession under Labour.
Next year non-oil GDP is forecast to grow by 2·25 per cent. If that is a recession, we were in recession for the


entire period during which Labour was last in power. Growth in non-oil GDP was never higher than 2 per cent. in any year of Labour's term of office.

Mr. Neil Kinnock: On the subject of the growth rate, could the Chancellor tell us whether the estimate of 2·25 per cent. of non-oil GDP growth next year was made by the same person or the same group, or on the same basis, as the forecast that this year growth would be 0·9 per cent. when it has been minus 2·5 per cent.?

Mr. Lamont: The right hon. Gentleman knows very well that that estimate is in line with the majority of forecasts. It is not simply an optimistic Government forecast: it is one which is supported by the IMF, the Confederation of British Industry and many other reputable organisations.
The Labour party has sought to deploy another argument. It seeks to belittle bringing inflation down. Its line of argument is that getting inflation down is easy in a recession. That is the point that the Leader of the House keeps making. There is just one problem with that argument. If it is so easy, why did not the last Labour Government do it when they had the chance? In their recession in 1974–75, GDP fell by 3·25 per cent. Manufacturing output fell by almost 11 per cent. Unemployment rose and disposable incomes fell. But did Labour's recession help to get inflation down? In 1974, prices rose by 16 per cent. In the following year, they rose by 24 per cent.
The Leader of the Opposition conceded in the House the other day that we were on track to get inflation down to German levels, but he then dismissed that achievement by saying that Germany was growing while we were in recession. The right hon. Gentleman might like to know that, again according to the IMF, we will grow faster than Germany next year. He did not admit that.
Britain is on track for a steady, non-inflationary recovery. That is precisely what business and industry need—a recovery that will gather in strength and will be sustained. It will be sustained because it will be soundly based. It will be based on low inflation and the supply-side reforms that have transformed the British economy during the past decade: lower taxes, simpler taxes, less regulation, privatisation and trade union reforms. Those are the reforms that have revolutionised the competitiveness and productivity of the British economy.

Mr. John Smith: The right hon. Gentleman mentions lower taxes. Will he now justify to the House of Commons his remark in this place that the Government have been cutting taxes since 1979? Given the increase in national insurance and the huge increase in value added tax from 8 per cent. to 17·5 per cent., how can he possibly justify what he said?

Mr. Lamont: The right hon. and learned Gentleman knows that we have cut tax rates. On almost every occasion that we have done so, the right hon. and learned Gentleman has voted against the cut. The right hon. and learned Gentleman says that the burden of taxation in the whole economy has increased since 1979. We have admitted that. It is true. We replaced excessive borrowing amounting to up to 9 per cent. of GDP with sound finance.
Let me ask the right hon. and learned Gentleman a question. If the burden of tax has increased, that seems to me a good reason to try to bring it down. Why does not the right hon. and learned Gentleman agree? Why does he say that we are wrong to reduce taxes? Why does he vote against tax reductions every time that we make them? Why does he want to fight the next election on a platform of increasing taxes? That seems a most extraordinary thing for the right hon. and learned Gentleman to do.

Mr. Smith: The right hon. Gentleman just admitted that the burden of taxation has increased in the way I described. How then can he say that the Government have been cutting taxes since 1979? Will he be a man and withdraw that claim?

Mr. Lamont: I admitted what has been admitted many times in the House before. In the first two years, where did the burden come from? To some extent, it came from increased North sea oil and corporate taxes. We have been reducing income tax rates steadily since we have been in office, and we intend to continue doing so.
Another matter in which the right hon. and learned Gentleman was not interested was export performance, which, of course, has been outstanding. We are not only holding our share of world markets but increasing it. It looks likely that our share of world trade in manufactures will rise for the third year running, for the first time in at least a quarter of a century. That again gives the lie to those who said that Britain's businesses could not compete within the exchange rate mechanism.
The right hon. and learned Gentleman talks a lot about investment. What about the £19 billion-worth of direct investment which flowed into the United Kingdom last year—investment which shows the confidence that our policies command with overseas investors. The right hon. and learned Gentleman went to Tokyo recently. We know why he had to go. I am sure that we all sympathise. He had to try to convince the Japanese that they could trust a Labour party run by the unions. Did he tell them about Labour's plans to introduce a minimum wage? Did he tell them about his plans to legalise secondary picketing? Did he tell them about the unions who, at the Trades Union Congress denounced Japanese investment as "alien"?
Who would want to invest in Labour's Britain? The foreign investment we are now seeing would be inconceivable under a Labour Government. That investment is already helping to reduce the trade deficit, and by the mid-1990s, that investment will make Britain a net car exporter for the first time in two decades.

Mr. Alan Williams: Will the right hon. Gentleman give way?

Mr. Lamont: I shall give way, but I am anxious to make some progress after this intervention.

Mr. Williams: I was in charge of inward investment in the last three years of the last Labour Government. By the time that we left office, there were more than 1,500 foreign companies operating in Britain. I negotiated with Hitachi, Toshiba, Aiwa, Hoffman-La Roche, and with Ford to bring that company to Bridgend. The right hon. Gentleman need not lecture us about inward investment. The Government did not invent it—it was there when they arrived.

Mr. Lamont: I am well aware of what the right. hon. Gentleman did and I congratulate him. He should communicate his enlightened attitude to his friends in the trade union movement.
Overall, business investment rose by 45 per cent. in the three years to 1989 and was at a record level in the first half of 1990. At that time, businesses in this country were investing a sixth of national income—the highest share for the past 30 years.
Even after the fall during the past year, business investment is still higher than in the first half of 1988, itself a record at the time. In fact, the proportion of national income going into business investment today is higher than at any time under the last Labour Government. Business investment lags the cycle, but it will recover during next year, picking up as the recovery gathers pace. It will increase by more than 4 per cent. in the year to the second half of 1992.
I heard the Leader of the Opposition refer to manufacturing investment. As in many things, the right hon. Gentleman is a bit behind the times. He has quoted figures on manufacturing investment, but what he does not always understand is that much investment which used to be done by manufacturing companies is now subcontracted to service companies. What is the result? If one studies the figures, one will find that core investment in plant and machinery—which is what Opposition Members are really interested in—is 50 per cent. higher today than it was in 1979. That tells us about investment in manufacturing industry.
Nor should we forget that the quality of investment, by which I mean its profitability, has improved dramatically at the same time. The corporation tax reforms of 1984 made the system simpler and fairer. The right hon. and learned Member for Monklands, East wants to reintroduce those tax breaks, at a cost of billions. Perhaps he would put corporation tax back up again to pay for them. Whenever the right hon. and learned Gentleman is asked a difficult question, he recites his favourite phrase—investment and training, investment and training, investment and training. I must warn him that he is beginning to sound like a parrot that has learnt one thing. It is true that he has some colourful markings, fine feathers and a wonderful beak, but his repertoire is very limited.
The right hon. and learned Gentleman ought to learn a few new words and themes. What he cannot grasp is where money for training and investment comes from. Business does not need his tax breaks to invest it needs profits—the word that he never mentions. In the 1970s, profits were eaten away by inflation, but in the 1980s they rose sharply. As we come out of recession, profits are beginning to rise again. That is exactly what British business needs to train more, invest more, and create more jobs. It does not need the help of the right hon. and learned Gentleman: it just needs the right conditions—low inflation and high profits.
In the past few months, the rate of increase of unemployment has fallen sharply. Unemployment may continue to rise for some time yet, but it will peak sooner and at a lower rate than it did following the last recession.
The way to get unemployment down is to get inflation down. That is the lesson from all the best performing economies in the world. Delivering low inflation is the most important way that the Government can help people back into jobs. But it is not the only thing that we can do. We can reduce unemployment by making the labour

market work better, so that, when jobs are created, the people are there to fill them at a wage that employers can afford to pay.
That is why we have introduced training credits for 16 and 17-year-olds. By the end of the next Parliament, they will cover the whole country, and we are expanding initiatives to help the unemployed.
Next year we shall spend more than two and a half times as much in real terms on training, enterprise and vocational education as the last Labour Government. However, publicly funded training is only part of the story. Employers' training expenditure, as the latest CBI survey reveals, shows clearly that businesses are spending at record levels on training even in a recession. That is a measure of how business has become better and more energetic in its training, and it is partly a tribute to my right hon. Friend the Secretary of State for Employment and his policies.
Yesterday, we announced extra resources to help to increase student numbers. In 1979, in Labour's "Opportunity Britain", only a privileged few—12 per cent.—of our young people went on to higher education. Next year, it will be one in four—60,000 students more than this year. By the end of the decade, it should be one in three. That is a remarkable achievement. It is a Conservative Government who hold out the ladder of opportunity to our people. As a result, Britain has the best educated, most skilled, most highly trained work force in its history.
There was one remarkable omission in the speech of the right hon. and learned Member for Monklands, East. Earlier in the debate on the Queen's Speech, my right hon. Friend the Prime Minister spelled out at some length our position on the intergovernmental conference on monetary and political union. We cannot say that the right hon. and learned Gentleman made the position of the Labour party at all clear.
The Leader of the Opposition talks about what he calls the illusion of sovereignty, as he called it on the "Today" programme, and he attacks the Government for not being positive enough. However, when I asked him what he meant and why he said that, he would not answer. He avoided the question by saying that he wanted more regional policy and that he wanted to give away our fiscal freedom. He wanted more of our taxpayers' money to be spent not by the British Government in Britain on what the House decides, but by the Community elsewhere in Europe on what the Commission decides. The right hon. Member for Bethnal Green and Stepney (Mr. Shore) agrees with me and knows that what I am saying is precisely right.
So I ask the Leader of the Opposition again. In the national executive committee document, the Labour party says that it supports a single currency and that it thinks that that is the only way to stop the currency speculators. The Opposition are still living in the 1960s world of Harold Wilson, obsessed with currency speculators. What we need to know now is which of the conditions that we set during negotiations they would drop. Are they urging us to give a firm commitment in favour of a single currency? We have made our position clear. The right hon. and learned Member for Monklands, East has said that they favour an unconditional commitment to a single currency. Unless the right hon. and learned Gentleman denies it, that is the only conclusion that we can draw.

Mr. A. J. Beith: I would like to be clear about what the Chancellor is saying. Is he saying that the Government will accept a single currency on conditions that he can now define?

Mr. Lamont: The Government have made it clear that we are not prepared to give a commitment to move to a single currency. We believe that, if monetary union happens, it should be on an evolutionary basis, driven by the market. That is and always has been our position. It is the position of the Opposition that is shrouded in obscurity. When we listened to the right hon. Gentleman, we heard that he wants to give a commitment to a single currency without any conditions whatsoever. That appears to be his position.

Dame Elaine Kellett-Bowman: Would my right hon. Friend make it clear to the Opposition that their illusion of a regional policy in an enlarged EC may be a different kettle of fish from what it used to be. Few, if any, of our regions would qualify for assistance under regional criteria, and Opposition Members ought to know that.

Mr. Lamont: My hon. Friend makes a shrewd point and is precisely right. Any expansion of regional policy is not likely to be to the benefit of this country, and I am grateful to her for drawing our attention to that fact.
Yesterday, I announced our public spending plans for the next three years. Once again, we have shown that there is no contradiction between our prudent policies and high-quality public services. We have honoured our commitments and allowed expenditure to rise to meet the unavoidable consequences of the recession. But neither spending nor the PSBR will rise to the heights of previous recessions. Government expenditure will peak at 42 per cent. of GDP, compared to 47·5 per cent. in 1982–83 and a skyscraping 49·25 per cent.—very nearly half the nation's income—under Labour.
We remain committed to balancing the budget over the economic cycle. In 1987–88, we repaid debt equivalent to 3 per cent. of GDP, comparable to our assumption next year of a 3 per cent. PSBR. Compare that with Labour's peak of 9·5 per cent.—the equivalent of £55 billion today.
Our objective remains to balance the budget over the cycle. Just imagine how preposterous a goal that would be for the right hon. and learned Gentleman to state. Even yesterday, he wanted more money for training, for transport and for industry. Now that he has had a day to reflect, the whole House will be waiting for his answer to some vital questions. Does he accept the pledges made by Opposition spokesmen to spend more than we plan to? How would he pay for them? [HoN. MEMBERS: "Answer."]
Let us start with the National Health Service. I announced an increase in plans of £1·5 billion for the NHS—£1·5 billion which will help the NHS upgrade buildings and hospital equipment. Spending on hospital and community health services will rise by more than 5 per cent. in real terms between this year and next, bringing the total real increase in NHS spending since 1979 to well over 50 per cent. We could not have made our commitment to the NHS clearer. What a contrast with the Labour party—the party that cut nurses' pay and, in one year, cut NHS capital spending—hospital building—by 22 per cent. Fine words but poor action from the Labour party. So would the right hon. and learned Gentleman spend more? Now is his chance to tell us how much. [HON. MEMBERS: "Answer. "]
We also announced an extra £1·4 billion for British Rail and London Transport. Next year they will invest more than three times as much as they did in 1979. If the right hon. and learned Gentleman were standing here, would he spend more? His hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) would like to, but would he? Now is his chance to tell us how much. [HoN. MEMBERS: "Answer."]
What about education? We have more students in higher education than ever before. Pupil-teacher ratios in our classrooms are at their lowest ever, and spending per pupil is up more than 40 per cent. The leader of the Opposition plucked a figure our of the air and said that he would spend £2·6 billion more. We he licensed to do that? Would the right hon. and learned Gentleman give him the money? If he would, how much? [HON. MEMBERS: "Answer."]
Next year, the aid budget will increase by 2 per cent. in real terms. Again that is not good enough for the hon. Member for Cynon Valley (Mrs. Clwyd). She wants to put it up in a single Parliament by more than £3 billion. Would the right hon. and learned Gentleman give her the money? Now is his chance to tell us. How much? [HON. MEMBERS: "Answer."]
In April, the right hon. and learned Gentleman published what he called a shadow Budget. Why does not he publish a shadow autumn statement? Then he could give us the answers. He must tell us this; is the level of spending that we have announced too high, too low or just about right? Is the level of borrowing too high, too low or just about right? We have set out our expenditure plans for the next three years, on which we shall fight the election. The country wants the same from the Labour party.
In the document "Meet the Challenge, Make the Change" the Labour party promised that it would publish its detailed spending plans at the time of the election. now that the election is a little closer, the hon. Member for Copeland (Dr. Cunningham) tells us that it will not publish its plans. What is the Labour party hiding? We know what it is hiding: the cost of unaffordable spending plans and the massive increases in taxation that it knows are needed to pay for them.
We have costed the hundreds of pledges made by the right hon. and learned Gentleman and his colleagues, and we know that they add up to £35 billion. The right hon. and learned Gentleman has never quarrelled with the detail of any of our estimates. The £35 billion of extra spending means £35 billion of extra tax—perhaps not right away. Perhaps he would try to borrow some more, but he could not delay the evil day for long. Eventually, it would mean skyscraping taxes, not only for the better-off, but for everybody. The right hon. and learned Gentleman always forgets that what the Government give, they first must take away, and a Labour Government would take away a lot from the British people.
The right hon. and learned Gentleman claims that he would get the money from growth. We have heard that one before. That is what Labour Oppositions always say, but Labour Governments always fail to deliver, because their policies of intervention and regulation throttle recovery. Growth would peter out under Labour.
Even if Labour could somehow spend the growth created by Conservative policies, the right hon. and learned Gentleman still would not have the money. He clearly has not read the public expenditure plans any more carefully than he has read the forecast. The plans that we


have published for the next three years already take account of growth. Those plans are consistent with our objective of balancing the budget over the medium term. If the right hon. and learned Gentleman wants to spend more, he must either borrow more, or tax more, or both.
The British people have seen through Labour's deceit. They know what a Labour Government would mean. Since the war, living standards have risen half again as fast under Conservative Governments as under Labour. Since 1979, living standards have risen by almost 37 per cent. We have cut income tax rates. The plans that I announced yesterday show that, even when times are difficult, we will continue to improve public services and to honour our commitments.
It is this argument that leads to the right hon. and learned Gentleman's increasing desperation—a desperation that manifests itself in his peculiar determination never to have one consistent policy when he can have two contradictory ones. He thinks that we should cut interest rates further and faster; but at the same time says that we should stay in the exchange rate mechanism. We know that it is our cautious approach that has enabled us to cut interest rates and keep the pound stable. He wants to increase spending; but he claims that he will not put up taxes. We know that it is our firm control of public spending that has enabled us to cut tax rates. He says that we should improve competitiveness and strengthen the supply side; but he wants to introduce a minimum wage and bury business under a mountain of bureaucracy. We know that low inflation and a more flexible labour market is the way to create wealth and jobs. He says that there is no recovery. A few weeks ago on the radio, he said that the recovery would be weak and faltering. His right. hon. Friend the Leader of the Opposition has told us that the recovery is heading for an inflationary boom. We know we are headed for sustained, non-inflationary growth.
A Labour Government would bring higher taxes, higher inflation, higher interest rates and higher unemployment. Their policies would leave the nation with no prospect of economic recovery and no hope of improving the public services. This Government are dedicated to a sustainable, economic recovery based on stable, low inflation.
We are dedicated to a tax system that gives people the incentive to work and the opportunity to save. We are dedicated to using the fruits of these policies to improve the public services of the nation—not only providing our health, education and transport systems with increased resources, but securing improved performance from them.
This Government's objectives are shared by the nation, and the economic policy which serves those objectives deserves the support of this House. I ask the House to reject the amendment and to support the Loyal Address.

Mr. A. J. Beith: There could hardly be more of a contrast between this year's debate on the Loyal Address and our debate last year. Hon. Members may have forgotten in the interval what happened.
Last year's debate was marked by a speech by the right hon. and learned Member for Surrey, East (Sir G. Howe), who was in the Chamber a moment ago, rather like Banquo's ghost, but has disappeared, in rather the same way. That speech was probably one of the most dramatic

and remarkable, although it was quiet in delivery, that many of us have heard in the whole of our time in this House, because it was the undoing of a Prime Minister.
The speech pointed to the impossibility of papering together deep divisions over Europe by the use of sophisticated language. It blew open those divisions, but did not stop the present Prime Minister saying, when he spoke as Chancellor in that debate:
I believe that they will vote for the consistency, courage and conviction with which my right hon. Friend the Prime Minister has led this country so successfully for so long."—[Official Report, 14 November 1990; Vol. 180, c. 599.]
Conservative Members did not wait to find out whether people would vote for that courage and conviction, but bundled out the then Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher) pretty quickly once they had had the encouragement of a Liberal Democrat by-election win and the exposure of the divisions by the right hon. and learned Member for Surrey, East.
In the same debate, the then Chancellor forecast the same growth that has been forecast today—a growth that did not happen. It was the beginning of the protracted end of the Government. The next stage in that process has been a Gracious Speech full of apologies. The apologies may be veiled and may take the form of a reversal of previous policies, but they nevertheless constitute the admission of how wrong the Government have been. The council tax Bill exists because the poll tax was the disaster that so many hon. Members said it would be. That view was expressed by everyone on the Opposition Benches and a few Conservative Members, but was ignored as the Government arrogantly used the power of an artificial majority to force the poll tax through.
Similarly, the Gracious Speech is an apology for the privatisation process that has taken place, because it has led to the wholesale transfer of monopolies from the public to the private sector without serious competition, or adequate regulation to replace competition where it could not exist. That is why the Queen's Speech contains a commitment to introduce legislation to reinforce the regulation of privatised utilities. It concerns privatisations that have taken place in the past few years under processes and with measures of regulation which the Government said were more than adequate, dismissing all our criticisms. The Government's admission that they must return to that issue is another apology, but return they must, as anyone who considers what is happening in British Telecom—the bills paid by the customers or the salary received by the Chairman of that company—will be quick to point out.
Another apology has been made in all the charter proposals for public services. It is an apology for the steady decline in public services during the decade or more in which the Government have been in power. That decline will not be arrested by charters of citizens' rights in those services, desirable though some aspects of those may be. Yet again, it is an apology for failure.
The apology that is missing from the Queen's Speech is for the recession. Nowhere do the Government admit that they have produced a recession which they regret, or that they have magnified the extent of that recession by past policies. Rather, they tell us what they told us last year—that they will maintain conditions for sustained growth. Are those the conditions that provided the recession or are they something different? Sustained growth sounds unconvincing in the mouth of the Government because, in


the past few years, Britain has grown at a rate well below trend growth and below the OECD average, managing a paltry 0·75 per cent. in 1990 and with a projected fall of 2 per cent. during 1991.
The Government cannot maintain conditions for sustained growth if they do not introduce such conditions. That must include long-term investment in key areas of training, education, research and development, and transport. Governments should concentrate on such matters. They are no good at running industries, and probably not much good at picking winners and deciding where in the economy investment can best be directed. They must ensure that the matters for which Governments must be relied on are properly provided. Education and training are at the heart of that list, as is an adequate transport system.
The conditions for sustained growth outlined in the autumn statement appear to be based on the idea of a revival in consumer spending rather than an investment-led recovery. It is hard to envisage how that will happen. Much of the consumer spending boom of the 1980s was based on rising house prices and the enormous withdrawal of equity from housing that fuelled the inflation of that period. That will not happen now. House prices will not rise in the same way and consumers who have been through that experience have been hard bitten by it. In many cases, the victims of that period cannot engage in much consumer spending now. If they can, they are much more cautious as a result of the experience of the past few years than they have ever been.
The autumn statement contains something that I have never seen in an autumn statement before—a chart designed to show not figures showing what might happen in the economy but estimates of consumer confidence based on Gallup poll evidence. The Treasury Select Committee will have fun discussing the precise significance of that measure, which is another attempt to talk up the economy and persuade consumers that it is all right to spend now. People will not be kidded that easily. They have seen what it is like to be unable to meet their mortgage repayments and be faced with redundancy and unemployment.
The Gracious Speech also refers to
policies designed to reduce inflation further".
I am in favour of such policies, but a little confused about the Government's current attitude. Only recently, the Prime Minister said that the Government had inflation "licked". I am sure that he is honest and believes that that is so. He must believe, then, that 3 or 4 per cent. inflation is a reasonable long-term rate for the United Kingdom economy. That view is not shared by many pensioners. Many hon. Members will have had the experience of constituents who say, "I don't understand how inflation can be coming down when prices are still going up." That may be expressed in simple terms, but it is the reality. As long as inflation exists, prices go up. Lower inflation may please economists and be an index of an improving trend, but it is not what most people want. They want price stability. We need an economy that is dedicated to price stability.
The most effective proven mechanism to achieve price stability is an independent central bank dedicated to that objective. I still wonder what happened to the paper produced by the right hon. Member for Blaby (Mr.

Lawson), which the former Prime Minister, the right hon. Member for Finchley, threw into her waste paper basket with what oaths and cries we shall never know.
The right hon. Member for Blaby may not like the idea of a European central bank, but he is clearly on record as saying that he believes that in this country's economy an independent central bank would be a guarantee against inflation. Indeed, it would have done some good to have one when he was Chancellor of the Exchequer, as it would have made a significant difference to some of the measures that he took, which stoked the fires of inflation. I am not yet convinced that the Government have the policies to counter inflation. They are in danger of becoming complacent now that we have reached welcome lower levels of inflation, and are lulling themselves into believing that the problem has been "licked".
The Government make commitments in the Gracious Speech in which there is no substance. The commitments have been abandoned before they have been voted on. It is unusual to have an autumn statement in the middle of a debate on the Queen's Speech, but it has at least given us an opportunity to test the veracity of the promises that have been made.
One of the promises is that the Government will promote enterprise and training. Before we have had the opportunity to vote on that policy, the autumn statement has informed us that the Government will not promote training or fill the training gap that has developed in recent years. It says that the money which it was prepared to commit to training will not meet the pleas of the training and enterprise councils, which are struggling to deliver the training guarantees which the Government have committed them to providing, and which cannot go beyond the delivery of that guarantee to extend training opportunities in a serious or significant way.
The £470 million announced yesterday will be taken up in large part by programmes that have already been announced, such as the employment action programme, by money for job clubs and by funds for departmental redundancy payment schemes. The money left over is unlikely even to provide for the current training budget to keep pace with inflation.
The Government say that they will promote enterprise. Why, then, do they not do more for small business and look again at legislation on the late payment of debt? Even the chairman of the National Westminster bank has conceded that they should look at that issue. It is a matter of deep concern to many small businesses—it is killing some of the most enterprising small firms—that they are not able to obtain proper payment of debt, often from larger and better-funded institutions than themselves.
Another commitment in the Gracious Speech to which, I suspect, there is little substance is the commitment to introduce legislation to reinforce the regulation of privatised utilities. We shall look with interest to see what that legislation will be.
We would support any moves to increase the powers of the regulators to give them stronger teeth. That is particularly necessary in the water industry, where there is no prospect of competition. The idea put about by Ministers at the time that there would be competition in the water industry—because people would compare one region of the country with another—is unrealistic. That is not how competition works. Competition works if one can buy an alternative product at a better price from


somebody else. That cannot happen in the water industry, so there must be much more effective regulation than has existed in the past.
We must look also at other areas of privatised industry. The recent profit figures of British Telecom tell their own story. We must examine the Office of Fair Trading's recent comments on British Gas. We argued from this Bench that the regulatory machinery for British Gas was totally inadequate and that the basis of the privatisation was wrong. We shall also have to look at the electricity industry, where the Government produced two large generation companies solely to try to privatise nuclear power. They had to abandon the privatisation of nuclear power, leaving themselves with a highly monopolistic structure.
I do not believe that, deep down, the Government are committed effectively to fighting monopoly and promoting competition. Some Conservative members may have a desire to do so, but there is no real strength of commitment to the promotion of competition and, for example, to the toughening up of the Monopolies and Mergers Commission and the greater detachment of that body from the powers of the Secretary of State for Trade and Industry, who seems more interested in the argument about French nationalised industries than in the promotion of competition in our domestic economy.
There are significant and eloquent omissions from the Gracious Speech. For example, there is not a mention of the words "single currency", despite the fact that it is one of the most fundamental issues facing the country today. That is recognised by its supporters and opponents alike. Although it is the subject of a crucial conference which is about to take place, the Government do not have a real policy on it. Indeed, their policy is not to have a policy. Their policy is to try to avoid making a decision this side of the general election. That is precisely what the right hon. and learned Member for Surrey, East described a year ago. It is an attempt to find a form of words around which people of different views can unite.
The Labour party has had similar problems and has gone a step further. Labour Front-Bench Members seem to have committed themselves to a single currency despite the fact that some of their Back-Bench supporters continue strongly to oppose it, although they are having difficulty with the question whether a European central bank would be independent. Their recent policy statement will cause some heart searching on the part of the hon. Member for Bolsover (Mr. Skinner) and some of his hon. Friends.

Mr. Skinner: My position is quite clear.

Mr. Beith: The Government are still trying to get away with having no policy. Imagine what would happen if Britain sought to remain outside a single currency and European monetary union. That is ultimately the issue facing Britain.

Mr. Skinner: It would be a good day's work.

Mr. Beith: I appreciate that the hon. Member for Bolsover and the right hon. Members for Bethnal Green and Stepney (Mr. Shore) and for Chingford (Mr. Tebbit) believe that that would be a good day's work. Neither of their respective leaderships agree with them. I do not think the Prime Minister imagines that this country's future would be secure if we remained outside.
A single currency and European monetary union are coming: there is no question about that. The issue is whether Britain is in or out. If we are outside, we shall not enjoy the advantages of a single currency or have the investment in this country of those companies—our own and overseas firms—which want to invest in the core of Europe and enjoy full access to all that goes on in Europe. We shall not be able to influence events that control our destiny. Anyone who imagines that a British Chancellor of the Exchequer could, wholly independently, determine interest rates here without considering what was going on in a Europe with a single currency, with all the other member countries belonging to it, is totally wrong.

Mr. John Butcher: Is the hon. Gentleman aware that one estimate of the costs saved by industry by our joining EMU is 0·05 per cent., while other estimates show that there would be an unnecessarily high increase in unemployment from being locked into EMU under current trading conditions? Has his party analysed those comparative costs?

Mr. Beith: The hon. Gentleman is talking about transaction costs. I believe that the saving in those costs would be higher. But that is only a small part of the single currency argument. The most crucial aspect is whether we want our currency to be locked into a stable currency in Europe or whether we want to be able to devalue our currency in the hope of averting unemployment. What we almost certainly would do by such a devaluation process—from which the Labour Front Bench is now trying to distance itself—is to postpone decisions which industry would have to take in the end, anyway. The benefit to competitiveness would be short-term, while the damage to our credibility as an economy would be massive.
That is why there are only a few recalcitrants on the Back Benches on either side of the House—among whom the hon. Member for Coventry, South-West (Mr. Butcher) is an honoured member—who still advocate a devaluation-based policy and the maintenance of our ability to devalue.

Mr. Skinner: Why does the hon. Gentleman's party believe that, because the Common Market has been in existence for a few decades, it will continue as though nothing is happening to stop it? Spanners are being put in the works of that gravy train. Through a thousand years of European history, nation states have come closer together. Every so often, they have become so close that they cannot stand the sight of one another. Then they begin to fall apart. That is happening in Russia, Yugoslavia and to some extent in Canada.
I urge its adherents not to believe that philosophically the members of the Common Market will continue to get ever closer, even towards the end of this century. Eventually we shall see—I know that I shall see it—the breaking up of the Common Market.

Mr. Beith: The hon. Gentleman should devote his time and energies to trying to convince his hon. Friends on the Labour Front Bench of that. They have rejected the view which he espouses, just as the Government have rejected it and as we have rejected it since the 1950s. We believe that there is a determination in Europe to create institutions through which Europe can be economically more successful.
That is not to say that we shall lose difference and divergence in Europe. Anyone who imagines that a single currency, or even the steps for political union that we advocate, means an end to divergence is imagining things. Differences in national view and culture will remain, just as they remain within the United Kingdom. Indeed, it comes ill from the Government to argue that power would become too centralised in a European system when they have centralised power in Britain, taking power away from the nations that make up the United Kingdom to bring them to the centre.
The costs to Britain of staying out would be immense, as would be the costs of remaining in the slow lane. If we remain ambiguous about whether Britain should be fully in the European Community and in the single currency, the same adverse effects on investment will apply. The Gracious Speech should have made it clear that Britain is committed to the achievement of a single currency and monetary union, in which we shall be a full participant.

Mr. Terence L. Higgins: The Treasury Select Committee will look forward to taking evidence from the Chief Secretary and from the Chancellor of the Exchequer on the autumn statement before reporting to the House, and it would be wrong of me to anticipate what that report might say.
However, I think that I shall carry the Committee with me in welcoming the fact that the Chancellor has accepted the recommendation we made after the Budget this year when we said strongly that he should not inhibit the operation of the so-called automatic stabilisers which were likely to increase the deficit, and that he should take the opportunity to make some supplementary discretionary increases in public expenditure. Both those actions, while they increase the deficit, will be of great help in reducing the depth and duration of the recession.
I welcome the increase in expenditure on the national health service announced in the autumn statement. It is significant that the shadow Chancellor made no reference to it in his speech, although I have noticed that in the press some Opposition Members have been saying that the increase in national health expenditure is in some sense an election bribe. If that is so, it is necessary to look at the massive increases in extra expenditure on the health service which took place last year, the year before and the year before that. If it is an election bribe, it has been going on for a long time, probably since the last election.
The Gracious Speech says that the Government will
continue to play a constructive role in the two Inter-Governmental Conferences on Political Union and Economic and Monetary Union".
I want to refer particularly to economic and monetary union, to which the hon. Member for Berwick-upon-Tweed (Mr. Beith) also referred. The single currency is not mentioned in specific terms, but the IGC is mentioned in the speech. I want to make some important points. I am neither a Euro-sceptic nor a Euro-maniac. I should form a group slap in the middle. I have always believed that it is right for Britain to be a member of the European Community.
There has always been something of a trade-off between the costs and disadvantages of the common agricultural policy on the one hand and the potential advantages of the

single market on the other. What gives me grave cause for concern in present circumstances is the way in which the Commission seems to be extending its operations into other areas such as the environment and whether a bypass should go here or there. We get no quid pro quo, and the principle of subsidiarity, about which we used to hear a great deal but have heard very little recently, seems to have been forgotten.
I hope that we shall have an opportunity to speak about economic and monetary union in the debates that are scheduled to take place shortly. However, some points in the negotiations need to be dealt with at this stage, and hon. Members should be able to express an opinion at this stage. It would be totally wrong to have a referendum in any shape or form on this issue. I am totally opposed to referendums on any issue. We operate in a representative parliamentary democracy. If there is any issue that should not be dealt with by a referendum but which should receive the considered opinion of people in the House, it must be the single currency. One has only to speak to members of the electorate to realise that the crucial distinction between a single currency and a common currency is not generally understood by members of the public. Therefore, the issue should be considered in the House.
The basis of power of the House of Commons and this Parliament has always rested on the control of money—taxation and public expenditure. It rests on our supply procedure, ways and means resolutions, the argument that money should not be handed over to the Executive until grievances have been redressed, and so on. Therefore, I am profoundly concerned at the proposals in the Dutch draft treaty with regard to control of budget deficits of members of the EC.
The proposals in the draft are unbelievably ludicrous. They are quantitative with regard to borrowing and the national debt, and propose to impose penalties and reports from the Commission for those who do not comply. Option clauses or not, that is totally unacceptable. I am not sure whether my right hon. Friend the Chancellor has fully taken this point, hut, even if one were in favour of a single currency, as a number of people in Europe are, it is still not necessary to control deficits in order to achieve it. The extension into fiscal policy is something else.

Mr. Denzil Davies: Will the right hon. Gentleman give way?

Mr. Higgins: I want to continue, because this is a complex argument.
It is being shuffled in as a side wind, as if it is necessary for a single currency. That is not so. The evidence that the Treasury Select Committee has received on this issue shows that, even if one has multiple currencies, it is not possible to tell in which direction an exchange rate would move in response to an increase or decrease in the deficit. This is a complex issue, and no doubt one can pursue it elsewhere. However, that is the evidence that we have had from Treasury officials, and it is important to bear it in mind.
Because of its complexity, I wondered how it could be explained in more simple terms. While talking to my right hon. Friend the Member for Guildford (Mr. Howell) this afternoon, it suddenly occurred to me how it could be done. A massive deficit in Illinois or Texas would in no way prevent the United States from having a single currency. If the deficit were of sufficient scale, it might alter


the relative position of the dollar against the deutschmark or sterling, but it would not mean that the deficits of individual states would have to be controlled. Therefore, the basic argument put forward by Delors and others that there must be control of deficits in order to have a single currency is totally invalid.

Mr. Denzil Davies: There is a fallacy in the right hon. Gentleman's argument. There will be no united states of Europe. It is necessary for the Commission to control budgetary deficits because we will be transferring monetary policy to a supranational central bank. Therefore, there has to be some control over the national deficits. If we had a united states of Europe, the position would be different.

Mr. Higgins: That is not the case, for the reasons that I have pointed out. There may be a wish to transfer greater authority from here to the Community, but the single currency does not require control of the deficits. It may be that the argument for economic union as against monetary union is put in those terms, but, as I have said, the House should not give such authority to the Community, because it is the basis of our power.
The so-called opt-out clause has been given a great deal of publicity in the press. In the words of the draft treaty, one can be an "exempt" country. In fact, the opt-out clause opts out of only a very small part of the draft treaty. The Delors report put forward the argument for a single currency which would mean giving up for all time the main means of adjusting for differential movement in costs and prices over a wide geographical area. The argument at that time was that, if that causes distortions and so on and there is a variation in costs and prices in a particular part of the Community, there is no need to worry, because there could be a transfer of regional and structural funds from one part of the Community to another. One may think that doing that for Liverpool has not been terribly effective, and there is no guarantee that, if we accept a single currency, the Germans will he prepared to perpetually subsidise, for example, the Spaniards.

Mr. Butcher: Quite the opposite.

Mr. Higgins: Indeed.
If the others go along with a single currency and we make use of the exemption clause, it is not likely that they will say that we are also exempt from the cost of the transfer funds that are necessary because they have a single currency. That will not be the case.
My right hon. Friend the Chancellor has a slightly difficult task ahead of him. His attitude so far has been appropriate. I do not think that it is true that we do not have a policy. We have a policy to negotiate a deal that is appropriate for the United Kingdom. I hope also that, during the negotiations, we will consider not only our own interests. I profoundly hope that my right hon. Friends the Chancellor and the Prime Minister will seek to avoid the dangers for Europe as a whole that will arise if we rush prematurely along a particular direction with disastrous consequences.

Mr. Robert Sheldon: The speech of the right hon. Member for Worthing (Mr. Higgins) was impressive. The House will accept that he devoted much time and thought to it. He began by saying that he was

neither a Euro-maniac nor a Euro-sceptic. I think that that precisely defines my position. I remain one of the few hon. Members who in 1971 voted against a three-line Whip to join the Community. I find myself outflanked by hon. Members who are more recent converts, but I still maintain my position roughly in the centre. We needed to enter Europe because the advantages and disadvantages weighed in our favour. That must be our position. There must be no Euro-mania and no Euro-scepticism—only, what can we negotiate and how is it to our advantage? If we can negotiate a deal that is to our advantage, I shall be delighted, but if not, we shall have to find some other way of proceeding.
The autumn statement, perhaps because an election is approaching and spending is becoming more important politically, has received much more attention than previous ones. It is useful to hold this debate so soon after the autumn statement because we shall consider its detail in a public expenditure debate early in the new year, by which time we should have the most valuable comments of the Treasury and Civil Service Select Committee.
The autumn statement is one of the few decisions taken when it is known that there will be an election before the next year is out. As in 1964, when there was a similar situation, spending is rising rapidly, partly for good reasons, partly because these matters have become more intensely political, and partly, too, because dogma and ideology tend to take second place to the realisation of the need to win an election. When the Labour party took office in 1964, we found the cupboard bare. In fact, it was more than bare—it was overdrawn. I suspect that we would find a similar situation today.
Privatisation will be one of the main sources of finance for the extra expenditure. Previously it was thought that privatisation proceeds would amount to £5·5 billion a year. We now understand that those proceeds will rise to £8 billion a year in the years 1991–92 and 1992–93 before dropping again. That is a major change. Where will the Government get that money from? I suppose that it will come from privatising the Post Office, British Coal, British Rail and London Transport. But those are only thoughts—I assume that there are no plans yet—and what frightens me is that they will lead to the hurried reconsideration that we have experienced in the past. That money will not be made available to a Labour Government, which is one of the big problems that we shall face.
I feel very strongly about the way in which we rush forward into privatisations. Of course I have political differences with the Government, but I also have differences about the way in which these matters are handled. Again and again, the Public Accounts Committee has stated that sales should be dealt with in tranches. The Government should not flog assets in one go but should try to establish the right price and to achieve that price.
The Government sell gilts every month. They do not sell off the year's Government gilts but wait for the market to decide how much they are worth, and if they get that wrong they get it right in the next tranche of sales. Again and again, we have had hurried sales and have failed to get financial advantages that might accrue, at least in part. If the Government are going to sell the family silver, for heaven's sake let them get a proper price for it.
The proposed privatisations are not based on ideology, as the first ones were, but, increasingly being used to provide money for expenditure, and there is a limit to how far the Government can go in that direction. I urgently


plead: for heaven's sake, let us have proper valuations on assets. In several sales the Government did not bother with a valuation of the component parts of the assets. Again and again, the Public Accounts Committee has asked for proper valuations before sale. It is the only way that one can be sure of getting a decent price.
The rise in unemployment has had financial consequences. The extra 1 million unemployed people will cost between £3 billion and £4 billion. We would be delighted to see that money used for other public expenditure that has a more useful output. That will only be paid for by manufacturing industry. My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) points out again and again—I am delighted that he has taken on board the importance of manufacturing industry—that only through manufacturing industry will we pay for the measures that we want. It is not so much the employment created in manufacturing industry, desirable though that is, as the exports and currency earned overseas.
Manufacturing output is so important. The Chancellor frequently speaks of manufacturing exports, but fails to take into account the problems of manufacturing imports; and the two have to be taken together. It is just as bad for imports to close our factories as it is for us to fail to capture export markets.
The forecasts show that at the time of the last Budget it was assumed that there would be a 3·75 per cent. increase in manufacturing output over the three years 1989 to 1991. The summary in the autumn statement shows figures of minus 0·5 per cent., minus 4·25 per cent. and 3·25 per cent.—a total of minus 1·5 per cent. A move from plus 3·75 per cent. to minus 1·5 per cent. is a loss of about 5 per cent.—a serious loss. The Chancellor mentioned the skills that we have in manufacturing industry, but he should travel around the country and talk to people who understand the problems of training for the skills that are needed.
I should like briefly to mention European monetary union. When we consider convergence, we should be clear what we mean. To some people, it means interest rates and inflation. That is not too difficult to achieve. What I mean by convergence is convergence of enterprise, industrial performance and wealth creation. It is what it means to ordinary people when they see their living standards rise, and it is the convergence of economic effects that I really wish to see. That is much harder to achieve. No one knows precisely how to deal with growth rates. There are some indicators and some ways in which it is obviously sensible to proceed, but the outcome cannot be delivered in the same way as that on interest rates and inflation. The extent to which we can influence growth rates determines my attitude to economic and monetary union.
I am aware that our control of the Bank of England is not as good as it should be. Often, control has not been exercised. There must be day-to-day independence in the running of the Bank of England, but that can lead to much wider independence and to the problems that every Chancellor of the Exchequer has had. That is why we nationalised the Bank of England; and many Tories agreed because of their direct experiences.
In future, we will not just give the Bank of England independence; we will transfer that independence to others in other countries and rely on ECOFIN. What is that? The

Economic and Finance Council consists of 12 Finance Ministers. They will meet once a month. At least now we can just ring up the Governor and ask him to come along. In future, we shall have to rely on a Finance Minister going to the central bank—which, unfortunately, may not be situated in London—and he will have to argue with the other Ministers. There will be indecision, or perhaps no decisions.
I hope that we find solutions of the kind that I want to see—and I am delighted to support my party's statement on this matter. Let us hope that we find regional aid solutions. I am willing to be convinced, but I am afraid that the argument is only just beginning. If we find the right solutions, obviously we can proceed a little further.
The figures for Department of Trade and Industry expenditure have been £1·6 billion in 1989–90, £1·1 billion in 1990–91, £900 million in 1991–92 and £800 million the year after—the amounts are declining rapidly. Does that matter? Yes. I spoke to Lord King, the chairman of British Airways, earlier this week. I was worried about the treatment of Rolls-Royce over the purchase of Boeing aircraft. Boeing aircraft are being bought by British Airways, and in a parallel deal General Electric has been granted some form of entry into Cardiff to renovate engines. Rolls-Royce is being dealt a double blow: because its competitors are being brought into this country, and because of the failure to purchase Rolls-Royce engines.
Rolls-Royce is one of the most important companies in Britain. Much was expected from it. I asked Lord King why those decisions were made. He pointed out that it was because of commercial considerations. I asked him what discussions he had had with the Department of Trade and Industry, and he had had none. I asked him whether he had approached the Department, and he said no. I asked him whether the Department had approached him, and he said no. I do not believe that any other country—first world, second world or third world—would conceivably have dealt with the matter in that way. It is totally absurd. Rolls-Royce did not think that it was worth thinking about the country's importance, and the country did not think that it was worth thinking about Rolls-Royce's importance. Japan, Germany or France would not have acted in that way.
I am not a believer in total intervention or in totally free markets. We must look at the arguments on their merits and, in this case, the merits were outstanding. Instead of waffling on to the Confederation of British Industry, the Secretary of State for Trade and Industry should have been looking at Rolls-Royce and British Airways and trying to find a way to reconcile their differences in the interests of our country, of the people who work there, and of our science, technical and engineering efforts. What happened is scandalous, especially at a time when there is a need for the Department of Trade and Industry. Thank goodness my hon. Friend the Member for Dunfermline, East (Mr. Brown), who has the right ideas, is likely to be taking these matters further.
We are in a recession, although the Government have denied it. I called it a slump, which was not an exaggeration. The way in which the Government have let the decline continue is scandalous. When a Parliament runs its full term, there is always a danger that the Government will spend without caring too much about the consequences. The balance of payments is in deficit—it is, they say, at the bottom of the trough. If we are at the bottom of the trough, what will happen when we start


rising out of it? How will we recover? The Government have not told us anything, but this is the most serious matter of all. We have had our second deepest recession, bringing unemployment up to 3 million. Even with our balance of payments figures, we have not been able to achieve the steady increase in growth which was predicted.
This gloomy picture is made more gloomy by the fact that much of the money will be spent before the Labour party forms the Government. It will be a tough time for the Labour Government, but luckily we have the people and the means to deal with it.

Sir John Farr: I congratulate my right hon. Friend the Chancellor on what he said yesterday and today. He dealt effectively with the two points that were made from the Opposition Front Bench. His comments yesterday were excellent. People in my part of the east midlands, in Leicestershire, believe that his statement was excellent.
I congratulate my right hon. Friend the Chancellor not only on what he said and the manner in which he said it but on doing what many people want. How on earth can the Opposition fight, for instance, his plans to improve expenditure on health? Although I know that the NHS and hospital services should be improved even more, my right hon. Friend has struck the right note at the right time. People are determined to enjoy a better health service. Increasing expenditure by the amount planned—5 per cent. in real terms next year—is a feather in the Government's cap.
Yesterday, in highlighting the Government's expenditure plans, my right hon. Friend the Chancellor also spoke about the transport industries. British Rail and London Transport will have £1·4 billion extra in 1992–93. I have heard much of the debate, but not much mention has been made of the fact that, during the past 10 years, our national trunk road network has been transformed. Ten years ago, there was a dreadful backlog. Bypasses were much needed and our motorway programme needed to be extended. One can never say that we have a modern road network and that that is sufficient.
Wherever one goes, work is still being carried out, even in the remotest parts of Wales and elsewhere, and it is a delight to visit such places. Unfortunately, one cannot get to Northern Ireland in that way, but perhaps that is coming. One now takes for granted the many billions of pounds that the Government have spent on roads in the past 10 years, and I congratulate them on what they have done.
My right hon. Friend also touched on the issue of extra expenditure for defence. I should like to take this opportunity, looking away from the European scene, to congratulate my right hon. Friend the Secretary of State for Defence on sticking to his planned defence cuts. It would have been so easy to give way to—one could say—the regimental pressure which was applied to many in another place.
However, the world has been transformed. It is no longer divided into two blocs—the east and the west—glowering at each other and armed with nuclear weapons. Therefore, bearing in mind the continuing impact of the Gulf, it makes sense that defence spending is planned to fall between 1990–91 and 1994–95 by about 6 per cent. In

real terms. In view of the transformation of the international scene, that is the least that my right hon. Friend could have done.
However, there is one issue that has not been dealt with to my satisfaction at least, and that is employment. One of the plans announced by my right hon. Friend yesterday takes account of the additional employment measures which were announced in June. Total provision for employment spending in Great Britain in 1992–93 has been increased by £0·5 billion. But is that enough? From the evidence of my daily post bag, I do not believe that it is anything like enough, and I shall tell the House why in a moment.
Yesterday, all my right hon. and hon. Friends rejoiced at the continued decline in public expenditure. I remember that, a few years ago, public expenditure as a proportion of gross domestic product was more than 40 per cent. Ten years ago, the Government promised to reduce public expenditure and, as my right hon. Friend said yesterday, in the past 10 years the ratio of public expenditure to the national economy has declined by more than five percentage points.
There is still a long way to go, but progress has been made, and in the next few years I hope that the proportion of public expenditure as a percentage of our national economy will continue to decline. It is still far too high, but a new Conservative Government after the general election can consider aiming for a target of about 20 per cent. as the maximum public expenditure element in our national economy. There will be many further candidates for privatisation—British Rail and British Coal to name but two—so it is clear that that figure can be reached in a few years, given a new Conservative Government.
One would have been ridiculed if one had said even 10 years ago that we should seek to achieve a public expenditure percentage of only 20 per cent. of our national economy. That is no longer so because, apart from the effectiveness of our policies leading to the next century, Britain, led by my right hon. Friend the Member for Finchley (Mrs. Thatcher) and followed by my right hon. Friend the present Prime Minister, has pioneered a great shift from the policy of the state knowing best, of state intervention and of the individual counting for so little. We have pioneered a policy that the rest of the world is following, a policy of rejecting state controls and state interventions, of freeing the individual to do his own thing—good or bad—with self-respect and dignity and of being one's own master, as my right hon. Friend told the Commonwealth in Harare the other day.
Unfortunately, the Commonwealth is still one of the worst offenders with regard to human rights. I was glad to see the other day that Kenneth Kaunda of Zambia put his repressive policies to the test and secured the correct democratic answer. I hope that what happened in Zambia will soon happen in the rest of Africa and the world.
As I said, I want to refer to what I believe to be the too little that we have done for jobs. My right hon. Friend said that more would be given to the Department of Education and Science. He said that the number of university students, which is already high, would increase to the highest ever level by the end of the century. He rightly took pride in that, but I do not think that he has taken on board what I call ABE—adult basic education. Every day my post bag contains letters about ABE. I receive 15 or 20 letters a day about the failure—as the writers see it—not of the education of young people but of the training and


retraining of adults. As technology grows apace, as—I hope—the job situation begins to improve, and as the number of unemployed begins to fall, I trust that there will be more demand for expert retraining for adults.
It is wonderful to have a pattern to which youngsters can look forward. One in three will go to university by the turn of the century, but there are still many people who may be at work today but who, by the turn of the century, could be out of a job because of modern technology and the use of modern machinery. The purpose of ABE is to retrain adults, but it also plays an important role—more of a social role—in persuading people who have a mental or physical defect that they are not finished and are not for the scrap heap.
I could cite to the House numerous examples of people who, only through personal perseverance on an almost one-to-one basis and through devoted caring and teaching, have given tens of thousands of people hope and a purpose in life. Without ABE and without substantial funding of training, some people would be on the scrap heap of life. I want more money to be spent on retraining older people, particularly on the training in basic skills of those who are not physically equipped to do a job.
The recession has not yet ended. According to a report today in The Times, some parts of the country are now doing better, but unemployment in the midlands is climbing alarmingly. It is all very well for my right hon. Friend to say that unemployment is not increasing so quickly now and that there will be an improvement shortly, but many small businesses, employing two or three people, are still going to the wall. They say that it is because of the cost of repaying loans for essential new machinery and other new equipment.
The Chancellor should have reduced interest rates even further. He told the House that he has done as much as he can, but has he been entirely honest? Has he done as much as he could have done? Is not one of the bitter rewards of being in the exchange rate mechanism the fact that we are no longer free agents when it comes to interest rates? My right hon. Friend had to calculate whether a further 0·5 per cent. cut would cause us to bump along the bottom even more under the constraints of the exchange rate mechanism. We are already very close to doing that. However, unless my right hon. Friend cuts interest rates by a further 1 per cent. by Christmas, many companies will go to the wall, with the result that the economy may be beyond repair.
The exchange rate mechanism has provided a discipline for many companies. It may be an unwelcome discipline for the Chancellor. In my view, it has prevented him from reducing interest rates still further. Nevertheless, as a member of the exchange rate mechanism, we have been provided with independence. I do not believe that the Labour party would do anyone a favour if it introduced a single currency forthwith, were it to form the next Government. The adoption of a single currency after the next election would be disastrous for Britain, and disastrous for British jobs.

Mr. James Molyneaux: I am delighted to follow the hon. Member for Harborough (Sir J. Farr). In particular, we appreciate his comments on the improved

road network throughout the United Kingdom that has been brought about during the last 10 years. We on this Bench have good cause for feeling grateful to him for his support in times past in our modest request that communications between the constituent parts of the United Kingdom should be improved, yet avoiding falling into the trap of demanding exorbitant expenditure, thereby wasting national resources. The hon. Gentleman may be interested to know that a debate is raging elsewhere about the improvement of cross-channel routes being continued. My hon. Friend the Member for Antrim, East (Mr. Beggs) would be glad to speak in due course to the hon. Member for Harborough.
I paid close attention to the competent and impressive speech of the right hon. and learned Member for Monklands, East (Mr. Smith), but it was not clear, at the end, whether he had finished his speech or whether he was merely giving way to certain Conservative Members. I am thinking of a phrase that we used when the Labour party was in power: it sounded as though he had terminated prematurely. I had hoped that he would utter literally one word—Maastricht—with all that would flow from that and all that we should associate with it, but we were disappointed.
To be fair, the Chancellor of the Exchequer did not linger on the question put to him: why was it necessary to raise interest rates in the first place, and what was the root cause of inflation? I shall not press that question on either Chancellor of the Exchequer or the Leader of the House, but at some stage I hope that the Chancellor will risk embarrassing former colleagues and lift a corner of the veil, for the benefit of us all.
We are indebted to the right hon. Member for Worthing (Mr. Higgins) for what he said. He told us that it was important that European matters should be touched upon in the context of this most important debate of the parliamentary year. On the first day of the debate on the Gracious Speech, my hon. Friend the Member for Londonderry, East (Mr. Ross) supported the Prime Minister's earlier assertion:
What this country needs is sound money".—[Official Report, 31 October 1991; Vol. 1, c. 39.]
That ought to be the objective of any Government in their right mind. We have always supported that objective.
My hon. Friend the Member for Londonderry, East was justified yesterday in inquiring gently whether there had been a decisive shift away from that doctrine in the autumn statement. After a careful study overnight of the statement, I am bound to say that I share my hon. Friend's unease. We have travelled a long way away from the sound financial policies of the early 1980s when we—in particular, Enoch Powell—supported firm control of the money supply during the reign of the right hon. and learned Member for Surrey, East (Sir G. Howe).
In the mid-1980s, that control began to slip. The cause was a loss of nerve on the part of some—if not in the Government, certainly among those who sit on the Government Benches—in the face of criticism of the alleged cuts. I say "alleged". The Government contrived to get the worst of both worlds in the last 10 years. They appeared to extol and even to boast of the virtue of cuts when no real cuts were made. That is the view of the hon. Member for Harborough.
We have begun the 1990s with a budget deficit. I should like to share the Chancellor's optimism that this dip is a one-off feature in a cycle of years. I hope that it is a cycle,


not a centipede. However, I am haunted by the fear that yesterday's autumn statement will give a degree of permanence to that deficit. unless the grip on expenditure is tightened.
I should also like to share the Chancellor's projection for economic growth. I hope, for all our sakes, that he is correct, but there can be no guarantee, no assurance, that will restore confidence. As the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said today in The Times, if the expectations are not fulfilled, the £10·5 billion borrowing requirement may turn out to be an underestimate. The right hon. Gentleman was correct to warn of borrowing difficulties which would have an adverse effect on interest rates, inflation and capital investment.
Yesterday, the right hon. Member for Bethnal Green and Stepney (Mr. Shore) was right to confront the Chancellor—and, for that matter, those on the Opposition Front Bench—with one brutal reality. If the public sector borrowing requirement rises above 3 per cent. of gross domestic product, the Chancellor would, indeed will, be caught in a trap if Her Majesty's Government signed the present draft of the treaty of economic and monetary union.
I must not neglect Her Majesty's Opposition. This morning, I wondered whether their amendment to the Loyal Address was drafted before yesterday's autumn statement. If so, that was a great mistake. Today, it reads as though they were urging the Chancellor to go further and faster down the road to financial damnation. The Official Opposition are no help to Members on both sides of the House who are doing their best to save Britain from a suicide leap into a Jaques Delors-style superstate, with a growing roll of absurdities.
Both sides of the House would do well to heed the bugles sounding retreat from bodies ranging from the CBI to the National Farmers Union. Even in the City, many people are beginning to spot the traps, and they have not yet realised that the single currency referred to is merely a cover name for single economic authority.
It was all very well to give a nod of approval in 1972. I was then a member of the Conservative party, and the House was told that this was merely a body to promote economic co-operation in Europe. I was not certain whether I believed that, and one or two Conservative Members agreed with me and voted accordingly. Now, however, we have moved from general approval to consent to particulars. That is a different story, as the distinguished bodies that I have mentioned confirm.
The proverbial man in the street will, indeed does, increasingly resent Community intrusion into the nooks and crannies. The crucial test will come later, over the issue of control of supply. That issue was touched upon earlier. Control of supply has been the mainspring of our system of parliamentary democracy for hundreds of years. Whether we like it or not, and whether other people like it or not, that test will come at Maastricht next month, when the Government, pressurised no doubt by the Labour Front Bench, may be tempted to "sign up in principle". A form of words will be cobbled together by the Foreign Office in the vain hope that we as a nation can somehow escape the consequences of our commitment to a principle.
The two main parties in the realm cannot get away with that on the eve of a general election. What will their candidates say on the doorsteps? Will they be honest and confess that they represent parties which have sold the

voters out? Will they admit that they will continue the process of reducing the House of Commons to the status of a county council? Will they assure the voters that they will not go through the pretence of redressing grievances, "Because, dear elector, you will have to approach Brussels, not Westminster."
Will the Labour and Conservative parties send a joint eve-of-poll message to the nation, exhorting the electors to make the most of the morrow's opportunity to vote in the final meaningful general election after 700 years of British democracy?

Mr. David Howell: As the right hon. Member for Lagan Valley (Mr. Molyneaux) observed, with his usual perception, the shadow Chancellor's speech was remarkable for what it did not say—for what was left out. Indeed, the House quite expected a second half after the interval, but that did not come.
Notably, the right hon. and learned Member for Monklands, East (Mr. Smith) left out an exposition of the Labour party's official stance so far on taxation, with its official commitment to swingeing increases in the taxation of the incomes both of higher rate taxpayers and of standard rate taxpayers. [HON. MEMBERS: "Rubbish."] It is not rubbish, because the Labour party is officially committed to uncapping the national insurance contribution. I am surprised that Labour Members should say, "Rubbish." The official Opposition position—I use my words carefully here—is that they would increase the rate at which taxation is paid by higher rate taxpayers by about 22 per cent. and by many standard rate taxpayers by about 27 per cent. That is quite aside from any increases in income tax planned for later—those, too, have been threatened.
When one hears the right hon. and learned Gentleman speak about confidence, one stands amazed that he is not aware of the major torpedo effect that any such proposals for massive increases in personal taxation would have on confidence and on the British economy.
Bizarrely, the right hon. Gentleman also omitted any reference to European monetary union. That issue is important, and my right hon. Friend the Chancellor, in a splendidly robust speech, dilated on it at some length. I do not want to speak too much about that matter; I simply marvel at one aspect of the Opposition stance. I understand the traditional position of the Labour party and the Labour movement—that the idea of a central bank, the Bank of England, being totally independent is anathema to them. For reasons dating back to their folk memory of the 1930s, they strongly believe that the Bank should remain under tight political control. For reasons related to their Keynsian love affair, they believe that they should have great freedom to operate ample budget deficits. Whatever the deficit may be, they would like the freedom to make it larger.
The Labour party holds those views sincerely, and has done so for most of the 20th century. Yet those two views are removed and totally undermined by its commitment to European monetary union and the draft Dutch treaty, which demands not only that the European central bank be totally independent, but that it includes central bank governors from completely independent banks and lays


down all sorts of ferocious penalties for any deviation in budget deficits. Such are the wonders of the Opposition stance.
Let us leave the debate there until we return to it in a week's time, but it rather sounds as though the Labour party's attitude to the Dutch draft proposal is that it is yet another scrap of paper treaty—"Sign it and disregard it."
My right hon. Friend the Chancellor, in his projections, shows that he hopes for a steady non-inflationary recovery. He believes that it will come, and I hope that he is right. I think that the recovery will come, but it will develop in hostile surroundings. Conditions outside this island will be unfavourable.
The United States economy was not much mentioned either in the autumn statement or in today's debate. At the moment, it is faltering disastrously. One has only to look at the daily headlines in the Wall Street Journal to see the most catastrophic figures—plummeting house sales and retail sales, faltering confidence and weakening investment. Sadly, we see in the United States the classic double dip shape—the W shape of recovery. The line went up a bit in the summer, but now it has gone rapidly down again. That is very serious for us—perhaps not as serious as in the 1930s, but the United States still represents 28 per cent. of the world's GNP.
If the United States economy will not move—clearly, it is not moving yet, despite the further cut in interest rates there—that will have a depressing effect on the entire world economy, including the economies of Europe, and on our own economy. We might as well be realistic about that. Certainly, the present situation is sending President Bush into something of a spin as he realises that his political popularity and position may not be quite as impregnable as he thought. That is a difficulty that he must now face. The question is to what extent he can correct and overcome the debt-sodden, debt-deflated state of the United States economy by lowering interest rates further or urging Mr. Greenspan to do so. His efforts may have some effect, but it may be a very slow process and we must make that a factor in our equation.
After America, with 28 per cent. of the world's GNP, the next greatest economy in the world is Japan, with 14 per cent. The Japanese economy has been slowing down markedly, with the corporate earnings returns of the major Japanese companies now looking utterly miserable. What the Japanese call "slowing" may still be quite fast by European standards, but, as a motor of economic growth in the early 1990s—in 1992 and 1993—Japan will not be as powerful as it has been, and we must take that, too, into account.
If we look further through the gloomy catalogue, we may note in passing that the Scandinavian financial system seems to have collapsed and that the whole of Scandinavia is ridden with bankruptcies. We may also note that, as the former Soviet Union disintegrates, it is dipping into the abyss of hyperinflation, already running at 200 per cent. The most serious deficiency of all is that the former Soviet Union is not too clear what its currency should be—let alone how it should be stabilised.
As yet, there is no agreement on whether to have a single currency—echoes of western Europe, here—or on whether that single currency should be the rule and, if so, how it should be stabilised. The former Soviet Union may

go for several different currencies—a Ukrainian rouble or dollar or whatever, for instance—in which case, no agreement has been reached on how they should be stabilised. That issue has not begun to be resolved and, until it is, the effects on the rest of us will not be negligible. The process will have a destabilising influence on the rest of the world economy.
I come to the final factor in my catalogue of gloom. We must remember that, despite the promise of at least getting some of the participants who contribute to the instability of the middle east to talk to each other in Madrid and elsewhere, that deeply dangerous man, Saddam Hussein, is still alive and well and living in Baghdad. He is beginning to wait for the time when he can use renewed oil revenues to build up his arms once more and so increase instability, and when he can again threaten his neighbours in the middle east—as he will do as long as he is there. All that adds to our difficulties and to the weakening of confidence at a time when we want confidence strengthened to produce a good world recovery.
It may be said that I have painted too gloomy a picture. I have done so deliberately, to set out the context in which we must struggle to move out of our recession—which we are undoubtedly doing. It will be very tough going indeed, and we should have no illusions about that. I draw hope, nevertheless, from some of the things that are happening—sufficient hope to lead me to agree with my right hon. Friend the Chancellor that we are on the path to a recovery.
This island's exports are strong; we are performing remarkably well on that front.
We have heard a great deal about the state of our manufacturing industry. In fact, the manufacturing position is not nearly as miserable as Opposition Members keep insisting it is. As my right hon. Friend the Chancellor said, our manufacturing output is 25 per cent. higher than it was in 1979. Moreover, in its latest document on manufacturing, the CBI says specifically that it has deliberately understated the size of the manufacturing sector because—as my right hon. Friend the Chancellor rightly pointed out this afternoon—throughout the 1980s, and as the information revolution has taken place, increasingly large numbers of the activities previously designated as manufacturing activities have been contracted out to other firms.
I beg the Opposition to understand that, in the past 15 years, the essence of the manufacturing process has changed. The trend has been to increase the knowledge content—the software content—in the manufacturing process, and to reduce the hardware content. That makes for smarter, better, more efficient manufactured goods.
In reality, the word "manufacturing" itself is a bit out of date. The "manu" element is no longer the main element. We are now talking more about the brain and, if anything, the word ought to be "mentefacturing" or just "facturing". The essence of the process by which the key exports that will drive the economy forward are produced is the very high degree of knowledge content—much of it contracted out from the traditional manufacturing sector. By harping constantly on the old traditional manufacturing process, Opposition Members betray their lack of understanding of the fast-changing nature of the industrial process and of where we should really be putting our muscle.
There is another cheerful conclusion to be drawn from the British scene—despite the world gloom that I have


described—based on the enormous inflow of foreign investment, notably from Japan, which has now invested no less than £13 billion in the United Kingdom. As the CBI again pointed out, in 1990 the Japanese invested more in the United Kingdom than in the whole of the rest of Europe. Those investments are accompanied by Japanese assertions—which we must take at face value—that the Japanese now regard Britain as the best European country and the one in which they will enjoy the best and most favourable welcome.
Above all—I hope Opposition Members will share my pride about this—the United Kingdom is the country in which the Japanese find work practices and co-operation at the workplace by representatives of the trade union movement by far the most satisfactory. The Japanese know that, whereas 12 years ago this country was cursed by perhaps the most counter-productive, difficult and destructive trade union movement on the planet, today—partly as a result of the many trade union reforms, partly as a result of the enlightened views of modern trade union leaders and partly as a result of changed work practices induced precisely by that heavy investment from Japan—we have one of the best trade union movements and some of the best work practices in the world. That is something in which we can all take pride.

Mr. Frank Dobson: That is not what the Chancellor would say.

Mr. Howell: I am glad that the Opposition like that.
I draw cheer also from the German performance. Of course, the huge onward rush of the German economy is set to slow down a bit as the Germans run into a vast deficit to finance what was formerly east Germany, but a sort of German miracle is rolling along none the less. Many people may have doubted that this would happen, but there is now no doubt that the economy of east Germany—in sharp contrast, I am afraid, to those of Poland, Hungary and Czechoslovakia—is being turned round at a colossal speed.
It is also being turned round at a colossal cost, and the former west German taxpayer is having to put his hand deep into his pocket in order to finance the process. The net effect, however, is that east Germany will be operating in the way in which west Germany used to operate, not in five or 10 years but in two or three. That will provide a vast additional motor, as well as a vast additional competitive force, in the world market. Given that our exports to Germany are doing very well, they should do better still.
Finally, I suggest that we raise our eyes and look outside Europe. We may think that the structure of Europe is changing, but so is the structure of Asia, and there too, there are real prospects that might help increase our exports, provided that we get our policy and posture right. Around the southern edge of China, in Guandong and Fujian—the area of which Hong Kong is the pivot—the most fantastic growth is taking place, and a new miracle is unfolding even as we speak. The economy of an area of roughly the same size and population as Japan is beginning to grow at rates that make all our percentages in Europe look minuscule.
In the past year, Hong Kong has increased its exports to the surrounding areas by 29 per cent., and I am told by those who have travelled up the Pearl river recently that one can hardly tell where the Manhattan-like outline of Hong Kong ends and the Manhattan of the Pearl river, in

the People's Republic, begins—so fast is the growth there of great new cities, skyscrapers and industries, all of which will produce a vast amount of wealth and products that will be highly competitive and all of which will offer opportunities for British investment, exports and markets in due course. That reinforces our need to get our management of the Hong Kong situation and its politics right so that we can benefit as mightily in Asia as we can in Europe.
Set against the gloomy tone in which I began my speech, those reasons show that we have opportunities. We have secured low inflation and that is very good. Interest rates need not rise, although there is much talk about upward pressure on interest rates. As dollar interest rates have gone down, the Germans have found that the pressure on them to raise their rates is drifting away. We will not be troubled by such problems. However, it will be very hard to seize the opportunities that are now opening out.
I have four brief propositions for my colleagues on the Treasury Bench to consider as they ponder how best to seize the opportunities that have been created by their policies as we come out of the recession. I will make the four points in question form, but of course we obviously want answers.
First, how do we mobilise more private sector funds for the infrastructure of this country? On the first day of the debate on the Queen's Speech, the Leader of the Opposition referred to private funds in public transport and said that the Government would not do that. The day before he said that—I know that 24 hours is a long time for the Leader of the Opposition—the Dartford bridge was opened. That enormous project involved private money mobilised in public transport. I hasten to declare an interest, as I am director of Trafalgar House, the company which designed, built, owns, operates and will eventually transfer back to the public sector, that enormous structure. I hope that that is one of many such projects to come.
I hope that my colleagues in the Treasury will learn lessons from that project. They will know that the restraints and constraints on the project were considerable and at one point threatened to sink the whole affair. If we are to develop such techniques, we must overcome some of the shibboleths and delays and difficulties that were embodied in the Ryrie rules back in the 1980s. They declared the mobilisation of private sector funds in infrastructure to be virtually out of bounds.
Secondly, how are we to build on the amazing capital-owning democracy that we have constructed which has brought millions of people into share-holding? Those shareholdings are shallow and passive. The dream of those of us who considered the capital-owning democracy a decade ago was of turning earners into owners in millions. We believed that that should give the capital-owning democracy real depth and involvement and that it should not simply be a matter of millions of people owning only a few shares. We must develop our ideas on that most aggressively.
Thirdly, how are we to create much stronger links between business and local administration and local government? I regret the fact that the uniform business rate has broken that link. There is a missing element in the regeneration and new dynamism in this country. We must recreate effective links between local administration and local business development around the country.
Finally, given that, like the United States, we have deep Anglo-Saxon liquid capital markets—which is fine, as they have mobilised capital very well—how do we combine them with more involved ownership and backing for long-term investment? The trouble with deep capital markets is that there is an easy availability of capital and a rapid transfer of capital and assets, but people are not prepared to hang on to those assets in equity long enough for long-term investments, particularly in research and development, to be mobilised and held.
I hope that my Treasury colleagues will address those four issues. They have set a good scene and there are many opportunities for us to pull ourselves out of the recession despite the unfavourable world circumstances that I have described. I congratulate them on the point that they have reached, but there is much more work to be done.

Several Hon. Members: rose——

Mr. Deputy Speaker (Sir Paul Dean): Order. Mr. Speaker announced at the beginning of the debate that it may be necessary to impose a 10-minute limit on speeches. In view of the current state of play, I am glad to inform the House that that will not now be necessary. However, if everyone is to be called, I appeal most strongly for speeches to last not longer than 15 minutes.

Mr. Denzil Davies (Lianelli): The trouble with the right hon. Member for Guildford (Mr. Howell)—I say this without malice—is that when he says that he is being cheerful, he still sounds gloomy. He was right to be gloomy, and he should have remained gloomy to the end. There is probably more gloom about the British economy than about several of the economies that he mentioned in the gloomy passage at the beginning of his speech.
This debate is unusual because it comes against the background of the autumn statement, which is often debated separately, and the meeting in Maastricht at the end of the year, which may decide on economic and monetary union. No doubt we will have another debate before then on economic and monetary union. However, while the views of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) on Europe have not always been similar to mine, I was pleased to hear him say that he could not see how it was possible for 12 Finance Ministers in ECOFIN—about which we hear a great deal these days—to control a European central bank established on the model set out in the present draft treaty prepared by the Dutch Government.
If we sign that treaty or accept its principle, that European central bank will be totally independent. It will be more independent than the Bundesbank, because no Government will be able to control it. If we pursue that path, we must realise that we will be transferring basic fundamental power over our economy to a supranational body of unelected, well-heeled bankers who will be able to take economic decisions that affect the livelihoods of millions of people. We should not allow that, because that would be a contempt of democracy.
The spirit of the age, and of Europe in particular, is for more, better and wider democracy. However, some people want to entrench canons and principles of economics into an absolute treaty. Devaluation, monetary control and

inflation are important issues, but some people believe that they are absolute rights which should be enshrined in a treaty. I hope that we will debate those matters again.
Over the past six or 12 months, public discussion about the British economy has been more sterile than usual. The only questions that seem to have excited the commentators are: is the recession over? When will it end? Why is it not over? So far as I can see, unless there are fundamental changes in the British economy, the recession ain't going to be over for a considerable time because the economy is in such a state.
I disagree with the right hon. Member for Guildford. He does not like to talk about manufacturing. All right, let us talk about the production of goods that people buy in shops and the production of machine tools that industry wants to buy. Unless we can raise our production of goods, unless we can become more efficient and unless our manufacturing sector can become larger, there will be fundamental defects in the British economy and we will never get out of the recession.

Mr. David Howell: I am sure that that is a very good definition. However, the right hon. and learned Member for Monklands, East (Mr. Smith) asserted that we were at the bottom of the league. The CBI report on manufacturing, even in its narrow understated way, shows that we are not at the bottom. Some countries are above us and some below. In terms of manufacturing value added, we are doing reasonably well. It is not the miserable story that the right hon. Gentleman and his colleagues keep recounting.

Mr. Davies: The problem is that our manufacturing sector is shrinking. Perhaps certain parts of it are more efficient than they were 10 or 15 years ago, but the sector is shrinking. It now accounts for only 20 to 25 per cent. of the total gross domestic product of Britain. If we are to come out of the recession without increasing inflation, we need to sell more goods abroad and at home in competition with imports, but we will not be able to do that.
One has only to look at the economic forecasts. The forecast for next year is for a £9·5 billion balance of payments deficit. That is described in the Treasury's paper as a modest increase. It is an increase from about £6 billion to about £9 billion. On my mathematics, that is a 50 per cent. increase, against a background of, probably, rising unemployment, growth not exceeding 2 per cent., and, if not a recession, certainly no expansion in the economy. Our problem is that, however efficient it might be, our manufacturing sector is just too small to enable us to rely upon it. Its expansion could take us out of the recession without further inflation and increasing unemployment.
Sadly, whether we like it or not, Britain is now a service economy. Large sections of Britain, especially in the south of England, have opted out of the production of goods. In many parts of the south of England, only about 7 or 8 per cent. of the total employed population are employed in production—in making goods that can be sold and bought. Our service sector is now so large that it is an obstacle. It is concentrated in one part of the country, and it is an obstacle to economic growth and to our coming out of the recession without increasing inflation.
The service sector does not help the balance of payments. Only about 20 per cent. of what is produced in the service sector can be traded internationally. Everything


else is consumed within the national economy. If the economy were boosted, most of the extra revenue and income would go into the service sector, money would be spent on our imports, and the balance of payments would get worse.
Also, the service sector is inflationary. In most countries, a service sector is inflationary. For instance, Japan's service sector is very inflationary, but Japan is able to keep down its general rate of inflation because its manufacturing sector is so large and efficient. That is not the case in Britain. Until last October, the RPI showed that the service sector component in terms of inflation was 9 per cent. The ability to be more productive is more limited in the service sector. By its nature, the service sector of any economy is bound to be an inflationary part of that economy. Of course, unless we have a large efficient manufacturing sector, inflation will always be higher than it otherwise should be.
During the debate on the exchange rate mechanism, we were told that entry of the ERM would exert discipline and that inflation would come down as a result. That will happen in respect of manufacturing industry, but entry into the ERM has very little effect upon the service sector. The service sector is not affected by the ERM, because the services are not internationally competitive. A large service sector and a small manufacturing sector inhibit growth in the economy.
Ironically, we have a problem with unemployment in the service sector in the south of England. One reason for that is that most of the thousands of people who travel on those wretched trains to come to London to work are either unskilled or semi-skilled, to use the terms of the manufacturing industry. They work in shops, offices, building societies and banks. They sit in front of little screens and press little buttons, but no skill is involved. It is no condemnation of those people, but that is semi-skilled or unskilled work.
When there is a contraction in the economy, when the money supply has to be cut, there are no other jobs for them, because they have no skills. When the people who buy and sell shares in the City lose their jobs, they have nowhere to go, either, because they have no skills. Indeed, in many parts of the south of England, there are no other jobs to go to because the manufacturing sector—the productive sector—has been almost wiped out.
Another irony is that the service sector needs inflation. The Government seem to think, "If we can keep inflation down, everything will be fine and we will be electorally popular." Not at all. There will be inflation, an increase in the money supply and, especially, house price inflation. I was going to ask the Chancellor whether his views about defeating inflation apply to house price inflation. I am not sure whether they do. Of course, with house prices stagnant or falling, there are not many votes for the Government—certainly not in the south of England.
The service sector—the financial sector which produces nothing—needs inflation. It needs an increase in the money supply and high house prices to fuel conveyancers, estate agents, building societies and lending institutions. The Government wanted to create a property-owning democracy, and they did so, but that property-owning democracy needs inflation to maintain itself.
If we are to move to an era of low or nil inflation and to the European way of doing things, whereby house prices will not increase, I do not know what will happen to the economy of the south of England or to unemployment.

Perhaps the Government have not considered those matters. The size of the service sector is an impediment to economic growth because it depends upon inflation to a considerable extent.
Another way of getting out of the recession is by increasing public expenditure. The Chancellor did his best in the autumn statement. His statement implies that we are not yet out of the recession, so let us borrow some more, increase the PSBR, and do the Keynesian thing which, a few years ago, we did not think we should do, and perhaps that will get us out of the recession by the time of the election. That will not work. Interest rates will go up.
The PSBR is also back. The PSBR was supposed to disappear—that terrible thing that Labour Governments had. Under the sound money party, it is back with a vengeance—£20 billion next year. If we take privatisation receipts out of the fiddle which is contained in the heart of the forecast, the figure will be £20 billion or £25 billion. Of course interest rates will go up. I do not believe that the PSBR can be financed. The Government are hoping that the election will have come and gone and that interest rates will go up to try to finance that PSBR.
My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said that, if the PSBR exceeds 3·5 per cent. or whatever, the ghost of Jacques Delors will descend upon Great George street. He will be there all the time. When the IMF people came to us, they stayed in Brown's hotel for about two months and then they went. They filled in their forms and off they went. But Jacques Delors's ghost will be here all the time. He will not move. He will watch the PSBR every year.
The right hon. Member for Worthing (Mr. Higgins) seemed to think that somehow—I take issue with him, despite his great knowledge—it is because of a common currency that we need controls over public sector borrowing. If we transfer monetary authority and control of our interest rates to a European central bank and still retain 12 national Governments, there must be control over the amount of money that those 12 national Governments borrow, because that borrowing will affect the interest rates which the central bank will lay down.
A consequence of monetary union is control over our public borrowing. It must happen. If we are to accept the transfer of monetary authority, we must accept control over the public deficit or the public sector borrowing requirement, or whatever it is called. Therefore, there is no salvation in increasing public expenditure unless we deal with the fundamental problems of the British economy. Nor will there be any salvation through cutting interest rates, unless we deal with inflation and its associated problems.
The Government are in a hole, as, unfortunately, is the British economy. The trouble is that the British establishment—we have heard from some of its members tonight—do not really believe in production or in manufacturing industry. They do not want to know about manufacturing; nor do the so-called "chattering classes", who like to think of themselves as outside the establishment but who are really part of it.
They are prepared to march for all sorts of worthy causes. They will march against the bomb and for the ozone layer. They will write constitutions and entrench a Bill of Rights, but they will not march for manufacturing industry. They will not meet in Manchester, Birmingham, London or anywhere else to discuss the problems of wealth creation and of manufacturing, because such matters are


too difficult. Instead, they chatter away about all sorts of things. The pressure groups are the same. They come along with their begging bowls, not caring about the other pressure groups, because all they want is more money. Again, however, there are no pressure groups for manufacturing industry,.
As I have said, British society is not interested in manufacturing industry, but if we continue to take no interest in manufacturing and if we do not do anything to help it in the 1990s, our public expenditure will have to be restricted. Our public services will be run down and we will not have the trains, the roads or the health service that people want.
Our first priority must be the production of goods. In the 1980s, the Government lost a marvellous opportunity to try to do something about producing goods. They threw away that opportunity, and with it a chance that no other Government have had since the war. Although that opportunity has gone, my right hon. Friends know what has to be done and they understand the difficulties of doing it, but only a Labour Government can do it.

Mr. Malcolm Thornton: The right hon. Member for Lianelli (Mr. Davies) tempts me, as someone who comes from Merseyside, to say that I will not be lectured by him about the problems of manufacturing industry. The policies of the Government whom he served left a bitter legacy on Merseyside. Job after job was destroyed because of Government intervention and because of pandering to trade union practices which were a disgrace. That legacy is still with us today, not only on Merseyside but in many other parts of the country. That is a matter of fact which we must all accept.
The right hon. Gentleman began by saying that this is a rather unusual debate on the Queen's Speech. He referred to the forthcoming summit in Maastricht. None of us would disagree with him about its importance. One of the reasons for its importance is that it marks the start of a general election campaign. Let us be honest about it—it marks the last Session of this Parliament: some time, within the next six months or so, we will be going to the electorate. The electorate have the right to expect the political parties to set out their stalls and to say what they stand for and what they will do.
Today's debate on the economy is central to any political party's presentation of its future policies. That is why I spent some time this morning looking at some of the things that have been said about this matter. I read some of the comments of the Chancellor of the Exchequer who said that the latest forecast showed a PSBR of £10·5 billion this year and of £11·5 billion for the following year. That does not quite square with what we have heard, but those were not the words of my right hon. Friend the Chancellor of the Exchequer, but of the right hon. Member for Leeds, East (Mr. Healey) on 15 December 1976, when he came to the House for the ninth time since the Labour Government had been elected with yet another series of measures designed to try to restore the fortunes of the economy that his Government had so signally destroyed.
The right hon. Gentleman said that he wanted to reduce the PSBR and that its level of £10·5 billion comprised about 9 per cent. of the gross domestic product. He added:

To achieve these objectives, the Government are proposing adjustments to current plans amounting to £1½billion in 1977–78 and £2 billion in 1978–79…
The fiscal adjustment in both years will come mainly from savings in public expenditure rather than increases in taxation. This is for two reasons. First, although the level of our public expenditure, as a proportion of GDP, is no higher than in some other industrialised countries, it has grown much more rapidly in recent years than has our industrial output, and our industrial output itself is relatively low.
The House should remember that that was said by a Labour Government in 1976.
The right hon. Gentleman continued:
Secondly—and perhaps this is not unconnected with our low level of industrial output—people at work are already highly taxed on their incomes, and face a further drop in their living standards in the coming year…Inadequate financial incentives to work and to invest could put our economic recovery at risk.
Who could possibly disagree with that? Is not that exactly what we have been saying—that if a Government overtax people, they destroy the incentive to work?
However, much more was revealed that day, when the right hon. Member for Leeds, East reduced local authority expenditure and said:
There will be a reduction in housing capital programmes…New construction will be suspended or curtailed in several other central and local government programmes, including roads, other environmental services, school building…and capital spending by the water authorities.
That was the start of the legacy that we inherited when we took office in 1979.
However, that was not all. Let us consider education, a subject in which the House knows that I take a keen interest. The right hon. Member for Leeds, East said:
Besides reductions in school building…the programme for current expenditure on education will be reduced by economies in the administration of school meals, by deferring the operation of Section 9 of the Education Act 1976 dealing with school milk, and by other minor savings".
That is the real effect of socialism, but there was still more. The right hon. Gentleman also reduced the defence budget, saying:
Despite the big cuts which we have already made in defence expenditure…We are looking to defence for further savings of £100 million in 1977–78 and £200 million in 1978–79.
Even overseas aid was cut, when the right hon.Gentleman said:
There will be reductions in the provision for overseas aid."—[Official Report, 15 December 1986; Vol. 922, c. 1525–29.]
That was the speech made by the Labour Chancellor in 1976. It was an appalling indictment of the inability of a party that was elected, having made very much the same sort of promises that the Labour party is making today, to deliver its promises to the British people. What a contrast to my right hon. Friend's statement yesterday.
Strangely enough, the figures tie in. My right hon. Friend is expecting a PSBR of £10·5 billion, but instead of that accounting for 9 per cent. of GDP, it constitutes only 1·75 per cent. of GDP. Instead of cutting the public sector programmes, we are increasing them. We are increasing expenditure on health, housing and education. I was delighted to note that the Government have adopted the recommendations of the Select Committee on Education, Science and Arts that we should increase expenditure to improve the standards in our schools. The House has heard me recommend that course many times. We have also seen increases for defence, transport and, yes, for overseas aid. What a contrast.
It would be foolish for any Conservative Member to pretend that mistakes have not been made. No Government have not made mistakes in their career. Sometimes those mistakes can be rectified and, indeed, we have gone a long way towards rectifying the mistakes that I believe were made about two years ago.
We have also shown that it is possible to expand services and maintain strong control of public expenditure. We have shown beyond peradventure that only with a strong economy can we expand the services that people want expanded.
We are seeing a new agenda being set for the 1990s. We have transformed the economy of Britain and done much to undo the damage done by the disastrous policies pursued in the 1970s, which led us into the position that we faced in 1979. We are seeing the benefits of that transformation flow through. Improved services are required, but they can be provided only with a strong economy and a Government who are determined to provide a strong economy. That means a Government who are not afraid to take tough and sometimes unpopular decisions.
We have taken those decisions many times. My right hon. Friend the Chancellor and his colleagues have shown their determination not to indulge in some cynical pre-election giveaway but to keep the economy firmly on track. A change in philosophy has brought about the transformation in the economy. My right hon. Friends show every sign of continuing to apply that philosophy with great benefits to the British people and the economy of Britain.
We cannot return to failed policies. They failed in the past and are doomed to fail again. When is a priority not a priority? I suggest that it is when everything is a priority. By definition, priorities stand out from other items. However, Opposition spokesman after Opposition spokesman says that every spending area is a priority. They do not seem to have learnt anything whatever from the past.
A study by Liverpool university's economic model shows that if Labour's policies were pursued they would result in declining growth, growing inflation, unemployment and worsening incentives. It estimates the cost to be at least £29 billion per year. It says:
it hardly seems possible that they can so comprehensively ignore the lessons of the past decades…these lessons are:

1. that high borrowing and its accompanying money supply growth lead to inflation.
2. that worsening incentives, whether by taxation or regulation, reduce economic growth".
We are already seeing, in industry, the City and many other areas, shudders of horror at what it would mean if the Labour party were elected to government and pursued one half of the wild spending plans that it has put before us so far. However, Labour's Treasury spokesmen signally refuse to admit to the cost of those plans. They will not say what their proposals would cost. We have tried to cost the proposals. We have tackled Opposition Treasury spokesmen on whether they would back up the spending pledges. They have failed to do so.
In his speech yesterday, my right hon. Friend the Chancellor showed that the economy is firmly on track. I listened this morning, as I am sure that many hon. Members did, to the "Today" programme on the BBC. In the usual way, it had to scour the corners of the country to find Oliver Twists asking for yet more. As my right hon. Friend the Chancellor said this afternoon, it does not

really matter whether we have given enough or whether we should give more or less. The fact is we have increased our spending programmes. When the Government do things which they are constantly urged to do, not only by the Oppposition but by other people, they receive little credit. I get tired of that.
I welcome yesterday's statement, because it sets out firmly the Conservative party's intentions not only for the general election year but for future years. It shows how we see the economy going and that prudent policies which are working will continue to work. The Conservative party puts that firmly before the British people.
We must expose the prospectus—if, indeed, it is a prospectus—that the Labour party put before the British people. We must show clearly that it is not costed and will not be costed. The only yardstick by which we can measure it is past performance. On past performance, the Labour party fails on every single count. My message to my colleagues on the Treasury Bench and all my right hon. and hon. Friends is that, during the next months, we must expose this sham. There is no quick and easy way to economic recovery, as the Labour party pretends, whether in manufacturing industry or elsewhere.
The Labour party must come clean and tell the electorate how it would create an economic recovery. It must cost its programmes so that the electorate can make a judgment. If the Labour party does not come clean and cost its programmes and continues to be unwilling to do so, the electorate will make their judgment. They will judge the party on its record, and that will mean that the Labour party will lose at the next general election.

Mr. Richard Caborn: I do not know whether the hon. Member for Crosby (Mr. Thornton) has read the amendment tabled by my right hon. Friend the Leader of the Opposition. The amendment sets out a framework for manufacturing. It is interesting to see several Conservative Members now reading the amendment. The Gracious Speech offered nothing to the 7,500 unemployed people, or 21·7 per cent. of the population, in my constituency. The Gracious Speech does nothing for manufacturing industry in Sheffield. The hon. Member for Crosby referred to manufacturing industry.
The manufacturing base in Sheffield was just recovering from the first recession in the early 1980s only to be hit by the second recession. I do not know where some Conservative Members obtain their advice or whom they consult, but if they spoke to some of the industrialists in Sheffield and south Yorkshire, which was a major manufacturing area and a centre of excellence in engineering and steel, they would find that people are extremely disgruntled. They believe that the Government have abandoned manufacturing industry and allowed it to be opened up to competition from companies in European countries and elsewhere which had support from their Governments.
That was graphically illustrated by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), the shadow Chancellor. He set out clearly where the Government had abrogated their responsibility to manufacturing and for wealth creation. The social consequences of that decline in manufacturing have been


picked up not only in my area but in many industrial areas by the local authorities. They have had to do so with reduced budgets. For example, Sheffield has to cope with a substantial reduction of £30 million in its budget, yet it must deal with all the social problems that have arisen from the decline of the manufacturing base.

Mr. Gregory: Why does the hon. Gentleman continue the Labour party's obsession with manufacturing? If he truly represented the people of Sheffield and south Yorkshire, he would give at least a cursory glance at the service sector. He has a major part of the Midland bank in the area and the area is a major centre for tourism. Yet we never hear from him or the Labour party about that. Instead, Labour Members constantly run down that part of the country and the electorate who work in the service sector.

Mr. Caborn: I am pleased with that intervention. I hope that the hon. Gentleman will take great care to listen to my speech because I shall cover many of the matters to which he refers. I think that he will agree that the Government have not supported industry in those sectors either.
As the amendment outlines, we need to create a framework within which commerce and the service sector as well as industry can flourish. That was once again graphically outlined by documentation on manufacturing industry put before the country by the CBI just before its conference. Yet again, the Government have ignored the advice. Yesterday, in the autumn statement, and today, they have walked away from the solutions that the CBI was asking to be implemented.
Like many other cities, Sheffield has tried in the face of adversity to develop a partnership not only between local commerce and industry but also including local authorities, the academic institutions, representation from the community, the development corporation and the TECs. That partnership has been operating for about six years, and it embarked upon a programme to find the highest common factor in the city rather than aiming for the lowest common denominator.
In the past three or four years, it has developed the infrastructure of the area—the airport and the supertram. Technology transfer has been developed. There is a new technology centre and science park, which is a partnership between the university, the polytechnic, the chamber of commerce and the local authority. Cable is another development, and Sheffield has developed an investment trust—the Hallamshire Trust—and Meadow Hall, a major service sector development. The partnership covered all those areas.
The development was an attempt to diversify away from a purely manufacturing base, to try to develop service industries, to introduce technology transfer into the structure and to ensure a transport system that was adequate to carry people and goods in and out of the area. There has been a combined effort, even in the face of all the obstacles that have been put in the way by the Government.
After a fairly meticulous survey throughout the country, about five years ago Sheffield decided to develop a centre of excellence for sport. We spent £150 million to

develop some of the best sporting facilities in the world—the swimming complex in Sheffield is ranked as the best in the world—and we ran the world student games.
What was the Government's attitude? At first the Secretary of State for the Environment wrote to say that he would support the development but that there would be no financial commitment to it. After embarking on the project, we got little support from the media or from central Government. On 14 July 1991, we staged the largest sporting event that has taken place in the world this year. There were 6,000 participants and 100 countries were represented. When Princess Anne opened the games on 14 July 1991, seven Sports Ministers from around the world were present and more than 100 embassies were represented in Sheffield on that day. The International Olympic Committee was represented, and there were experts from around the world representing most of the 11 sporting disciplines to be performed in the following 10 days.
Those games were the first multi-sport event in the world to include athletes from the new nation of Namibia. That event on British soil was the first time that 200 young people marched under the flag of the new Germany. However, no senior Minister from the British Government was present—not even the Minister for Sport. When the Canadian Sports Minister asked, "Where is the Prime Minister for the biggest sporting event in the world this year?", we said, "We have not even got a senior Minister here."
I am telling the hon. Member for York (Mr. Gregory) what Sheffield, South Yorkshire and the north of England did—gave a window of opportunity to the world and left a legacy in Sheffield, and we shall reap the fortunes of it in years to come. The Government could not even acknowledge that type of development among the public and private sector, the academic institutions and 6,000 volunteers who made the event happen. Had it not been for the presence of my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell), the shadow Minister for Sport, the attitude of many sporting organisations from around the world would have been much worse. He at least smoothed over some troubled waters and said that, even if the Government did not support the event, at least the majority of the British people did.
I raise the subject because, as the amendment says, there needs to be a new structure within the regions to carry out the regeneration that the Labour party stands for and has been advocating for the past two or three years. A delivery mechanism is necessary. Many projects in the north of England such as the world student games are being stifled by centralisation of power. That applies not merely to central Government but to the media and to major decision-makers because they are domiciled in London or in the south-east.
A branch line of the civil service exists—a few puppets are put in an area and they feed back to central Government. All the decision-making is here. It is not influenced by what is happening in reality in the regions where wealth creation exists whether in the service sector or the manufacturing sector. The amendment challenges the structures that govern us, the structure of how decisions are made, decisions that impinge on industry and commerce in the regions.
The centralisation of power has once again been graphically underlined because hon. Members have been


talking about public expenditure—where will we get money from and where will it be spent? The North of England Regional Consortium studied the distribution of public expenditure. I shall not bore the House with all the figures, but some should be given and probably the most graphic are the figures for expenditure per head of population.
In the north of England in 1989–90 total public expenditure per head of population was £1,707. In the south-east it was £1,876. If one takes investment-led expenditure by the Departments of Defence, Trade and Industry and Transport, more devastating figures emerge. The 1989 figure for the north of England is £248 per head, whereas it is £546 in the south-east. There is a major disparity in the distribution of public expenditure and, moreover, between 1981 and 1990 the trend was worsening.
The overheating in the south-east has been aided and abetted by the Government's decision to continue that trend. That is in stark contrast to what is happening in the rest of western Europe. Every country outside the United Kingdom has gone for some form of devolution or regional government. The West German experience has been mentioned many times, and it has been suggested that that is the way that we should proceed. If one studies the West German experience closely, one finds that the lander structure has asisted the development of wealth creation and of manufacturing industry far better than the centralised structure that we have in the United Kingdom.
The amendment begins to tackle the north-south divide and to make proposals that may start to regenerate the under-utilisation of the north of England. We have to stop this debacle. We have to stop the Secretary of State for the Environment going round the country like a modern-day Haile Selassie, dropping crumbs from the master's table in the form of city grants. We are a modern industrial nation, but authorities are having to bid for a small pot of money. It is like a Dutch auction. We are trying to regenerate our industrial base in the north of England. Surely civil servants and those in London are not the fount of all wisdom. There are industrialists and people in commerce, local authorities and the trade unions in the regions who know what is required for the regeneration of their area. Yet the Government pay them scant regard.
The amendment is constructive. It lays the framework that the CBI and British chambers of commerce have asked for—not to pick winners and losers, but a structure in which industry can operate. It would give industry a fighting chance. Industry is asking for no more and no less than what is happening across western Europe.
In support of that argument, Howard Davies, the controller of the Audit Commission, in his article in the Financial Times of 28 October, said:
Yet the European Commission is open about its desire to create a Europe des regions. There's a European Assembly of Regions and regional and social policy are oriented towards regional needs.
It's certainly arguable that without some sort of regional structure, the UK will be increasingly disadvantaged with no way of influencing Community regional policy.
Clearly there is support for the type of structure described in the amendment of my right hon. Friend the Leader of the Opposition. What Tory Members have said does not hold with industrialists, chambers of commerce or, indeed, the British people.

Several Hon. Members: rose——

Mr. Deputy Speaker: I call Mr. Gregory.

Mrs. Audrey Wise: On a point of order, Mr. Deputy Speaker. As there is now a special report from the Select Committee on Health about the breach of privilege, may I ask you to confirm two points of procedure? First, am I correct in thinking that the matter will go automatically to the Select Committee on Privileges? Secondly, what is the position of the hon. Member for Esher (Mr. Taylor), parliamentary private secretary to the Secretary of State for Health, who has disclosed only this week that he was in possession of confidential information as far back as July, pending the reference to the Select Committee on Privileges?

Mr. Deputy Speaker: As I understand it, the hon. Lady is saying that there may have been a breach of privilege. If that is so, I recommend her to follow the normal course: to write to Mr. Speaker and inform him of the matter so that he can consider it.

Mrs. Alice Mahon: Further to that point of order, Mr. Deputy Speaker. What is the position of the Secretary of State for Health, who acknowledged that the report was in the wrong hands and ordered its destruction, with reference to the Select Committee on Privileges?

Mr. Deputy Speaker: That would be a matter for the House to consider, if the Committee reported to the House. If there is an allegation of a breach of privilege, the correct procedure is to write to Mr. Speaker.

Mr. Bob Cryer: Further to those points of order, Mr. Deputy Speaker. I have not fully understood them, but is it true that they are about a leak from the Select Committee on Health, involving a Tory Member who is linked to the Department of Health, to weaken a report that was critical of hospital trusts? If that is the case, it is more than simply an individual breach of privilege; it undermines the whole Select Committee system that the House set up for the purpose of scrutinising and examining Departments.
It seems from my hon. Friends' remarks that a Tory Member has conspired with civil servants to leak information and even to arrange for amendments to he tabled to the report, which were then backed by Tory Members. I should be grateful for your guidance, Mr. Deputy Speaker, but it seems that all hon. Members who voted for those amendments in the knowledge that they were part of a shabby conspiracy should also be dealt with by the Select Committee.

Mr. Malcolm Thornton: Further to that point of order, Mr. Deputy Speaker. As the Chairman of a Select Committee that has suffered from the effects of a leak, I should like to ask for your advice. Is it not the case that there is a procedure which this House has laid down and which should be followed in this case? When the procedure is followed, the appropriate Committee investigates the matter and then makes appropriate recommendations. The matter raised is not a point of order that should be pursued in this way at this time.

Mr. David Hinchliffe: rose——

Mr. Deputy Speaker: Is this on the same point?

Mr. Hinchliffe: On a different point of order, Mr. Deputy Speaker. As a member of the Select Committee on Health, my central concern is that we may well have witnessed——

Mr. Ian Bruce: What is the point of order?

Mr. Hinchliffe: I shall come to the point of order. It seems that the Department of Health may well have drafted amendments that were moved in July by a Tory member of the Committee—[HON. MEMBERS: "What is the point of order?"] My point of order is this: will the Secretary of State for Health make a statement on this matter? The House has a right to know whether his senior officials and his parliamentary private secretary were directly involved in this shabby affair.

Mr. David Winnick: Further to that point of order, Mr. Deputy Speaker. You gave the advice to my hon. Friend the Member for Preston (Mrs. Wise) that the matter could be taken to the appropriate Committee and that she should write to Mr. Speaker. This is more serious than that. Surely it is a matter for the House to decide as early as possible.
In view of the serious allegation that civil servants were involved in framing amendments which were then put to the Select Committee in the name of a member of that Committee, and if the Secretary of State was in any way involved, may I suggest that he should make a statement? Even if he was not directly involved, he is responsible for his Department. A request should be made to the Secretary of State that he should make a statement tonight. We should not wait until next week.
The Select Committee system was established in 1979 on the basis that the Committees would be separate from the Ministries. If, however, they have become merely a forum in which the Secretary of State can use some Members for his own party's purposes, it is a serious matter. The Secretary of State should come here tonight to explain what has happened.

Ms. Harriet Harman: rose——

Mr. Deputy Speaker: Order. I will hear the hon. Lady, but I remind hon. Members that they are interrupting an important debate on the Loyal Address.

Ms. Harman: Further to that point of order, Mr. Deputy Speaker. We are facing an unprecedented situation. Would it not be right for the Minister to come to the House? It seems that the Government, having lost the arguments on the health service with their own Back Benchers, sought to interfere with the Select Committee to block its report on opting out. Should not the Minister be here to explain the complicity of his parliamentary private secretary in the activities surrounding this report?

Mr. Deputy Speaker: All I can say to the House is that, if it is alleged that there has been a leak from a Committee, there are well-established procedures for either the Committee or the House to deal with it, depending on the circumstances of the case. There is nothing more that I can say now.

Mr. Roger King: Further to that point of order, Mr. Deputy Speaker. Is it in order for copies of the report to be widely circulated on the Opposition Benches? Even the hon. Member for Peckham

(Ms. Harman), the Opposition spokesman on health, seems to have a copy of the document. Is it on general release for all colleagues?

Mr. Deputy Speaker: Order. We have had a very good run on this. From what has just been said, the matter may be automatically referred to the Privileges Committee. We cannot take the matter further now.

Several Hon. Members: rose——

Ms. Dawn Primarolo: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. I said that I shall take no more points of order. An important debate has been interrupted——

Ms. Primarolo: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. I have done all I can to assist the House and explain the automatic procedures in such cases.

Mr. Conal Gregory: I return to the important matter of the Gracious Speech. I am sure that the House welcomes the opportunity to discuss the economy in detail.
The Government's approach to the economy is in stark contrast with that of the other political parties represented in the House. The Government are clearly committed to reducing inflation. Since we joined the exchange rate mechanism, interest rates have fallen from 15 to 10·5 per cent. and inflation has fallen from 10·9 to 4·1 per cent.—close to the level in Germany. Although the Opposition do not want to hear these words of wisdom, that means that in the past year, Britain recorded the largest fall in inflation in the European Community, which is no mean achievement. Manufacturers and those leading the service sector in insurance, banking, tourism and legal services, rightly fear that a forthcoming Labour Government would immediately opt for devaluation, and the rest of Europe recognises that genuine worry.
The Gracious Speech was heard against the background of encouraging reports from the Confederation of British Industry, the Association of British Chambers of Commerce and the Institute of Directors. Their combined view was that the end of the recession was in sight. Indeed, exports have risen to the point where the trade deficit with Europe has been eliminated.
The amendment in the name of the Leader of the Opposition refers erroneously to the Government pursuing policies that would damage investment. Quite the contrary: only the Conservative programme will ensure investment and reinvestment. It is in stark contrast to the Labour party's policy, because the Labour party is pledged by clause 4 of its constitution to renationalise companies such as British Airways, BAA, British Steel, British Gas, Rolls-Royce and even British Telecom.
Such socialist policies would be disastrous for Britain. They would mean stealing shares from employees, who had owned them perhaps for the first time, reversing companies' efficiency, putting union barons in control in place of competent managers, and raising taxes to record levels to pay for the dogma of greater socialist control. Not


content with that, Labour's policies would reduce the scope for individuals to invest in the British economy, which is the envy of the western world.
One recalls with a shudder the view held by travel agents of British Airways before denationalisation. They rated it even lower than Ethiopian Airways. Today, the denationalised BA is a flag carrier which is envied throughout the world. Similarly, the chance of finding a clean working public telephone was slim under Labour. Today, consumers find British Telecom's services vastly improved. In the days under Labour, who would have thought that they would find a British Telecom that would compensate for delays in receiving telephonic messages? Competition and denationalisation together have achieved that.
However, it is not only in large companies that Labour would aim to reverse our recovery. Yesterday, the hon. Member for Dagenham (Mr. Gould) made the extraordinary comment:
There will be no provision for capping in any legislation"—[Official Report, 6 November 1991; Vol. 198, c. 472.]
that Labour introduces. That was not a throwaway remark but obviously a considered one. When my right hon. Friend winds up the debate, will he say whet her he agrees that such a spendthrift policy would mean no control over the loony left? We could expect the excesses of Camden in cities such as York. Just imagine studies by Karl Marx becoming the subject of a council presentation. Such are the heroes of the far left that they could even invade local government working.
For far too long, public services have not been adequately accountable. The citizens charter should reverse that, because it will ensure that the individual counts. My right hon. Friend the Prime Minister's initiative will certainly be attacked by the trade unions, which foresee their cosy world being put under the spotlight. Sadly, I predict confrontation between the Government and trade union barons like the newly elected Transport and General Workers Union chief, who is an avowed communist. Instead of seeing the benefits of the charter, union activists in York simply carp. One despairs that they will ever act constructively and champion the cause of the individual, rather than big brother.
The Gracious speech referred to plans to denationalise British Rail. Such a move is long overdue. It would benefit users—passengers and freight operaters—rail employees and taxpayers. We have already seen the success of those parts of British Rail that have become independent. I refer to British Rail Engineering—BREL—Golden Rail, Sealink, the former BR hotels, and on-station catering.
My right hon. and learned Friend the Secretary of State for Transport suggested last month that British Rail need not wait for the enabling Bill to accept competition. British Rail already accepts limited links with the private sector. In its publication, "Future Rail", it calculated private sector investment in freight as some £3 billion and has joint ventures in, for example, parcels, property development, station retail and catering outlets. Such collaborative arrangements are welcome, but do not ensure full competition, participation by employees in greater productivity or fair value for taxpayers.
Let the House consider a key part of British Rail that has been denationalised—BREL. In contrast to the days of the old socialist era, when BREL was under their control, its order books in York, for instance, are now full. There is today a spirit of confidence and export orders are

being won. Let the House compare the figures for the basic weekly pay of BREL shop floor employees with the basic rate for staf at British Rail's maintenance division. Staff in the denationalised part of the company enjoy between 24 and 31 per cent. higher pay, although they do comparable jobs in comparable pay bands for the same 39-hour week.
In addition, when BREL was released from the shackles of the state sector and was privatised, most employees were awarded free shares which, according to their most recent valuation, were worth more than £450. Yet the Labour party threatens to renationalise such parts of British Rail, forcing staff in York and elsewhere to take a substantial drop in their earnings.
Although Conservative Members are disappointed that British Rail has not used its resources efficiently, we are not prepared to see its poor performance continue. That is why the Government announced yesterday that they have added almost £1 billion extra to their plans for British Rail for 1992–93. That means that British Rail's total external finance—borrowing and grant—will amount to more than £2 billion next year, which is substantial support. Indeed, it is greater investment in British Rail than in the days of steam. The high increase in taxpayers' support announced yesterday will allow British Rail to proceed with investment despite lower forecasts for revenue and asset sales. This will include the new passenger rolling stock through the channel tunnel from London and the north as well as freight wagons and infrastructure works.
Let us now see British Rail place its orders for better rolling stock—which can be built at its carriage works in York—and organise better on-train services, with catering in evidence on every train. I travel on trains frequently and I have yet to come across a train journey on which, throughout its length—unlike American and French trains—catering is available all the time.
Let us see more developments at railway stations. British Rail is one of the largest property owners in the United Kingdom, but its lack of imagination is deplorable. In the whole of Britain, there is only one railway station at which one can cash a cheque. Compare comparable cities—for example, York with Utrecht. At the railway station in Utrecht, one can find perhaps 250 shops, offices and restaurants to which people want to go. Is there a railway station anywhere in the United Kingdom to which one would take one's partner for a special lunch or evening out? There is not, and that will not be conceivable so long as British Rail stays shackled in the state sector.
Despite British Rail's lack of progress, the Conservatives are committed to the railway industry. We have given it the taxpayers' support it deserves and have not starved it of the working capital and investment in the way the socialists did. The paymasters of the Labour party—in this context, the NUR and ASLEF—deplore such success, deplore the idea of the staff having shares and deplore the export achievement and lack of dependence on the closed shop.
Looking introspectively and backwards, Labour refuses to say how far it will borrow, how much it will borrow and by how much it will increase taxes. Labour's policies could never achieve the Conservative success in terms of higher living standards. It is right to consider the Gracious Speech in that context.
Under Conservative rule, the real take-home pay of the average family man with a wife and two children has risen by over a third, compared with less than 1 per cent. under Labour. The Gracious Speech builds on that success,


ensuring a stable, non-inflationary recovery, a form of success which allows the individual to take some responsibility. That should be heartily welcomed.

Mr. Peter Shore: The hon. Member for York (Mr. Gregory) began by referring to membership of the ERM and attributed to our joining a number of beneficial results, which he cited. I shall comment on our experience in the ERM, an aspect of our economic situation which has not received the degree of attention it deserves. I shall also refer to certain developments in the economy in the period since we joined the ERM and make certain deductions from them.
The hon. Gentleman referred to what he called our current account deficit having been effectively eliminated during the last two years. As he knows, the figures show that for this year we shall have a deficit on current account of £6·5 billion, that for next year we have a forecast deficit of £9·5 billion, that in 1990 we had a deficit of £14 billion and that in 1989 we had a deficit of £20 billion.
In other words, in a four-year period we have loaded ourselves with debt on external account, in our current account transactions, of no less than £50 billion. That is, for the most part, short-term money because it has been attracted in to cover those monumental trade deficits. In no period of British history—under Labour, Liberal or Conservative rule—have we fallen so grievously into deficit in our overseas current account and trading account. It gives me no pleasure to recite those facts because they are extremely serious, not only for the present but for the future.

Mr. Quentin Davies: rose——

Mr. Shore: No, I will not give way.
The problem is not reflected simply in that appalling accumulated trade current account deficit.
The hon. Member for York went on to cite the falls in MLR or interest rates since we joined the ERM. He rightly said that from 15 per cent. in October 1990 it has now fallen to the considerably lower level of 10·5 per cent. But he omitted to set alongside that another highly relevant figure, which is that, when we had an MLR of 15 per cent., we had an inflation rate of 10·9 or, for ease of reference, 11 per cent., whereas today we have an MLR of 10·5 per cent. and an inflation rate of just over 4 per cent.
It is the difference between the rate of inflation and interest rates that gives the real effect of interest rates. The gap between the rate of inflation and interest rates of just over a year ago, when we joined the exchange rate mechanism, was a 4 per cent., as it were, real interest rate charge on borrowers. Today, 13 months later, the gap is 6·5 per cent. That is the real burden of interest rates on borrowers. In other words, far from the pressure of high interest rates easing, they have increased their squeeze, not only on domestic but on business borrowers, too. That has been a most unwelcome development.
We must take account of the fact that since October 1990, when we joined the ERM, our unemployment rate has risen by 50 per cent. Month after month there has been an appalling sequence of figures, from 1·6 million in October 1990 to 2·4 million today, and it will undoubtedly rise further.
I am not attributing the whole of the recession of the last 18 months or so simply to our membership of the ERM. But I am saying deliberately that it has accentuated and deepened the recession. Our membership of the ERM denies us one of the most important instruments of policy, and that is control over our exchange rate and interest rate policy by which we could have hoped to ease the recovery of our industry, growth rate and so on.
I believed at the time, and I still believe, that we joined at the wrong rate in October 1990, at DM2.95 to the pound, and that we joined, in a sense, against inadequate criteria for membership. The missing criterion in the series of criteria which the right hon. Member for Finchley (Mrs. Thatcher) laid down in Madrid was basically about inflation. Our inflation rate had to narrow to the rates in the Community before we could join, and she added some other criteria. The most important missing element was that we should have taken account of our trade and payments current account.
If we had deferred joining the exchange rate mechanism until we had reached an approximate balance in our current account, we would have been much better served, and a much better judgment about the rate would have emerged. A fixed rate in the ERM which is apparently consistent only with an unemployment level of 2·5 million—roughly the current level—a period of nil growth in GDP and falling investment is hardly the rate at which we should have joined.
Let us suppose that, when we joined the ERM in October 1990, the rate had been perfect. What could we say about that rate as the months and years go by? We are very much concerned with our relative progress against the dominant German economy and currency inside the ERM. If we take 1989—not a bad year—as the base of 100, industrial development in Germany hit 110 in that year. It is certain to reach over 120 this year, and the IMF forecast for year three is 126·9. In other words, in three years the Germans will have increased their industrial investment by just on 30 per cent. By the same IMF calculations, the British figures are modestly down from 100 in 1989 to 99·3 in 1990, 87·4 in 1991 and the forecast for 1992 is 85·6. Therefore, the Germans will have increased industrial investment by 30 per cent. in three years, but we will have suffered a decline of 15 per cent.
What would the effect of that be, particularly if it were to continue for some time? Our competitiveness will be deleteriously affected by the relative performance of the two nations in terms of industrial investment, which is one of the crucial elements for efficiency and competitiveness.

Mr. Quentin Davies: I have been listening with great interest to the figures for investment in this country and Germany. Does not the right hon. Gentleman realise that the pattern that he is describing is a reflection of the fact that Germany and Britain are at different stages in the economic cycle? Had he chosen the three years previous to 1989, he would have found that a reverse picture emerged, in which we had a much faster rate of growth and investment than Germany.

Mr. Shore: I chose those three years not to give a distorted impression but because they are the three years since we joined the exchange rate mechanism. I could not take 1990 as the base because that was the year in which


we joined. Regardless of the different stages of the cycle, those are the facts that will have crucial effects on our competitiveness and costs.
At the heart of the argument about fixed exchange rates is the fact that different parts of an economic area or different countries in the trading world progress at different levels and achieve different levels of efficiency and competitiveness. If one country locks itself in for a period with another economy that is more efficient, as the German economy is and is continuing to be, it is bound to suffer closure of firms in its own domain, the growth of unemployment and, ultimately, the migration of labour to areas of new investment and higher competitiveness.
I fear that we shall find ourselves in that position. That is the argument against permanently fixed interest rates. The experience that I have related can be replicated all over the world. Nobody in their right senses thinks that the Americans should permanently fix the exchange rate of the dollar against the yen. Any such proposal would be greeted with hilarity. Japan's economic efficiency, based upon a huge industrial base and decades of high investment, is going ahead much faster than that of the United States. United States industry under those conditions would be progressively eliminated by the pressures of competition from the yen. The Americans are sensible enough to keep their currency in their own hands and adjust the dollar against the yen and any other currency.
I would have thought that we should be thinking hard about the experience of the past year and of how we are to deal with the problem in the time ahead. I believe that it would be excellent for not only Britain but probably most European countries if the German mark revalued and we all gained a certain benefit from that. I do not think that that will happen and we must take action if we conclude that it is necessary to do so. I fear that no action is being contemplated for the period ahead. We are imprisoned within the ERM at the present rate and within the first stage of EMU and the commitment to make a fixed exchange rate a permanent feature. We are facing the prospect of a single currency where there is no chance of any change in the rate of exchange. That is the major part of the treaty on economic and monetary union, and it has serious consequences for us.
I regret that we have not heard more from either Front Bench spokesman about the serious problems that will have to be faced in the next few weeks leading up to Maastricht on 7 December. Yesterday, I drew the Chancellor's attention to clause 109(b) in the draft treaty and the related protocol dealing with what is called "Excessive Government Deficits". The relevant articles describe what excessive budget deficits are. A budget deficit that is more than 3 per cent. of GDP will not be tolerated.
Not only that, but the Commission is giving itself power to take penal action against any offending country. Article 10 of the relevant protocol lists the measures that are being proposed. For example, an offending member should be made ineligible for European investment bank borrowing. An offending member should be required—this is interesting—to make a non-interest-bearing deposit of an appropriate size with the European bank in the same way as the Bank of England used to call up deposits from the commercial banks when we thought that that was a good way of correcting over-generous activities. The

Commission will impose fines of an appropriate size and suspend new commitments by the structural funds, including the regional fund, until the
excessive deficit has, in the view of the Council, been corrected.
I am sure that I carry the House with me in asking whether we are really going to subject ourselves—this country, this Parliament and this people—to instructions and rules as though we were a rebellious, irresponsible council? Are we really to say that we are not fit to govern ourselves and that these disciplines must be imposed on us? My right hon. Friend the Member for Lianelli (Mr. Davies) referred to the International Monetary Fund, which came to Britain to get agreement and stayed away after only a few weeks. This proposal imports the European Commission, with all its bureaucracy and authority, into our country permanently. It will be sitting at the Cabinet table dictating to the Chancellor what he should do.
What is the Budget judgment other than the fiscal stance or the extent of the public sector borrowing requirement? I pointed out to the Chancellor yesterday that next year's borrowing requirement will certainly be 3 per cent. of GDP, and I am pretty certain that it will be higher. It may even hit 3·5 per cent. or 4 per cent. That is no sin. The country is in a state of deep gloom and depression and needs stimulus. Anyone who has the slightest knowledge of how economies move and to what extent they go into cyclical periods of slump and boom knows perfectly well that to regulate the economy effectively and make it serve human and national purposes, there must be the power to deal not only with booms and to slow them down but with slumps and to lift people and industry.
That is only one of the constraints. The other is the establishment of a central bank. The Bank of England will become a branch of the European central bank, no longer capable of deciding interest rate policy or exchange rate policy. We shall even pool our reserves. Under the rules that are being prepared, and under the treaty provisions, we will not exist as an economic entity. Some people say, "Perhaps we could bring the European bank under collective ministerial control." My right hon. Friend the Member for Lianelli and the right hon. Member for Worthing (Mr. Higgins) properly referred to such rather vain hopes. We know that it is difficult for the Treasury sufficiently to control the Bank of England, but it will be much more difficult to control as one of 12 finance Ministers in an ECOFIN council. How absurd it is.
In addition, the European central bank is forbidden to take instructions from any organisation. The Community or the national states sign a pledge that they will not seek to instruct, to govern or to erode the independence of the European central bank. What does that leave? They can talk to each other and express opinions, but that is not good enough. That is the danger in merely these two provisions.
I have one or two points to make—these matters are of much importance not only to every hon. Member but to the country—not only to the Government but to my own Front Bench. Labour produced a document called "Labour in Europe" on 31 October. It clearly was meant to be more accommodating to Europe and to its development than the Labour party has been in the past. It seems to labour under certain misapprehensions about what is in store. It says:


The establishment of a monetary union would not require a uniform economic policy throughout the whole Community. The Commission has conceded that there should be no binding rules dictating the fiscal position of member states.
Those binding rules are contained in the treaty, yet the authors of the document have misled themselves into believing that there would be no binding rules.
The document refers to the importance of ECOFIN and how it will be a necessary and important political counterpart to Eurofed. It says that it is heartening to see that Labour's proposals have been taken up by the French Government and belatedly by the British Government. Is that part of the Government's proposals? I am not aware of any French pressure to subordinate the European federal bank to the ECOFIN Committee. If that is true, it has failed to emerge in the draft treaty that is due to be signed in four weeks' time at Maastricht.
I take it as inconceivable for any British Government to accept such draconian, alien authority over such intimate and important matters governing our national affairs. I take it to be doubly inconceivable that any Labour Government, who believe most strongly in intervening in the economy and using powers of economic management, would find it other than terrible and tremendously difficult to accept any such restraints. I am sure that the document was prepared before the draft treaty appeared, and I very much hope that I shall receive a reassurance from both Front-Bench spokesmen before the end of the debate.

Mr. Kenneth Warren: It is an honour to follow the right hon. Member for Bethnal Green and Stepney (Mr. Shore). I may not agree with many parts of his speech, but it was in the finest traditions of the House. The Conservative party is lucky that he is not displaying his intellect on Labour's Front Bench. The Labour party needs him badly, even if we do not agree with him. I hope to be able to deal with some of his comments because, as Chairman of the Select Committee on Trade and Industry, I share his grave concern about the future of manufacturing and trade in this country. My business interests are declared, but, contrary to some popular media suppositions, I am not connected with the Lonrho organisation.
The Gracious Speech offers a vision of the future that Conservative Members, and I believe the country, will welcome. Inflation is coming down; trade is going up and confidence is apparent. As Chairman of the Select Committee, I find that many people offer me their views and I am delighted to be able to report to the House that in the past several months those views have become not only more positive but aggressive in terms of the opportunity that Britain has to develop its trade and industry.
I should like to deal with three matters in the Gracious Speech, which I thoroughly support, where we can develop our ability to be more efficient, more constructive and more capable in the world of trade and industry. The first is where a company and the Government have a constructor-customer relationship, such as in the information technology industry, where annually the Government purchase £4 billion-worth of goods and

services, half of which goes to the Ministry of Defence. Obviously, the Government's purchasing power is very important.
Secondly, the Government are a catalyst on which the efficiency of enterprise depends. Although I welcome yesterday's announcement in the autumn statement about increased investment in transport, greater consideration should be given to the value of efficient transport and to the efficiency of enterprises in general. Thirdly, the Government and enterprise are sponsors of economic development, as in research.
Whatever the political to-ing and fro-ing on manufacturing industry, we must remember that we have been suffering from a problem which has developed throughout the 20th century. At the beginning of the century, this country enjoyed 33 per cent. of world trade, but the level is down to 5 per cent.—the good news is that it is growing again. The Germans started at 22 per cent. and are now at about 12 per cent.; the Japanese started at 2 per cent. and are now at 15 per cent.; and the Americans started at 12 per cent. and are now still at 12 per cent. Most countries have managed to keep up their share. Unfortunately, we have suffered decreases. It is interesting that, in the post-second world war era, the main falls occurred at precisely those times when the Labour Governments devalued.
In looking at the Gracious Speech and the autumn statement, I welcome the increased receipts for the Department of Trade and Industry from the launch aid levy on airbus deliveries—the airbus is a magnificent aircraft, selling worldwide. I am pleased that the innovation budget will be increased from £100 million to £120 million, and that brings me to my second point about the relationship of the Government and those who supply them.
The top technologies in the United Kingdom could be listed as pharmaceuticals, chemicals and aerospace, and in those respects this country has an enormous, unchallenged capability in the world. There is some stiff competition, but no one doubts our capability. The tragedy lies in the second-order technologies—white goods, cars and so on. We have lost markets to companies that have shipped their goods across the world to take advantage of what, at one time, were our well-preserved domestic markets.
There is no doubt that, well led, the British worker and British management are unchallenged. They are not just blips on a screen—major achievements have been recorded. There is British Steel at Llanwern and Port Talbot. There is Nissan at Sunderland. There is also my old company, GEC Avionics at Rochester, which I left many years ago and which has managed to achieve far more without me than it did when I was there. We have many capabilities which are well worth acknowledging and we should not talk ourselves down when thinking about what we can do.
I should like to offer the House two maxims: good suppliers listen to their customers, and good customers listen to their suppliers. I hope that the Government will always take account of the problems that have beset us during this century and are still with us. We have had a declining share of the world market. Throughout the period of our membership of the European Community, imports have steadily grown in relation to exports. We must now consider the reasons.
The past 15 years are important in terms of the growth of industrial power in the world. That power is


increasingly shifting towards the western Pacific rim. Jobs in manufacturing industry in the United Kingdom have steadily been lost and we now have only about two thirds the number 15 years ago. The Japanese have retained about the same level of employment in manufacturing industry. Japan and other countries such as Germany—which has retained its manufacturing capability—have managed to achieve a substantial positive balance of payments.
I am in favour of doing all that we can in the service industries. We in this country are successful, particularly in terms of financial services in the City, in ensuring that we capture and hold world markets. We must consider why our manufacturing capability appears to be dropping away, bearing in mind the quality of the management and workers, whom I have cited as examples. Manufacturing does not deserve that decline.
I should like to direct the House to one approach which was suggested to me. I seek information all over the place in industry. This approach comes from a group which I know well, the Society of British Aerospace Companies. I worked in that industry for many years. I asked the society what its relationship with the Government was like. It is particularly important for an industry involved in leading-edge technology to understand what should be, what can be and what is the relationship with its largest single customer, the Government.
The group expressed some concerns which I wish to pass on to my right hon. Friend the Chancellor and his colleagues in the Treasury, the Department of Trade and Industry and the Ministry of Defence as a customer. The group has already put those concerns to the Government, but they are worth retelling. The people involved are not looking for handouts or subsidies; they keep on saying that they want a dialogue—a dialogue of benefit to them and to the Government. The Government are both customer and, in the case of the civil aircraft industry—I referred earlier to the airbus—sponsor. They want a dialogue with the Government to find out what they can do to be even more successful and to work to the customer's advantage.
During the summer, there was a defence review. Ministers assured the trade association through the Defence Industries Council that industrialists could discuss matters relating to the economic, technological and defence implications of possible changes to the defence equipment programme. Unfortunately, that did not happen, which is sad. Some 200,000 people are employed by that business and probably another 200,000 depend on it.
We should not just say that we will do something. We should ensure that there is a dialogue so that those who want to sell know what they can do. While we are all enjoying the decline in defence requirements, it is particularly important for the highly skilled and highly qualified scientists and engineers to say how they would be better employed as we take advantage of the changes in "Options for Change".
Aerospace employs 10 per cent. of the national manufacturing work force. It has a turnover of £12·5 billion. In the past year, more than £8 billion of goods was exported—in other words, two thirds of the industry's capability. As in France, Russia and the United States, we have an industry that is self-sustaining. The Department of

Trade and Industry should listen closely to industry representatives, and I hope that the Department will pass their views on to the Treasury.
My right hon. Friend the Secretary of State for Trade and Industry is in St. Petersburg today. I hope that he can also go to the Strand and Stanhope Gate, if a little alliteration may be allowed. British Aerospace and GEC are two examples. They would like to have a closer dialogue with the Government, and I hope to have the opportunity to talk about that matter with my right hon. Friend when he returns.
I said that I wished to refer also to the interface of business with government. It is not just a matter of the number of Ministries. I hope that, when I have my chance to stand down at the end of this Parliament, the Conservative party manifesto will call for the removal of all sorts of Ministries, such as the Department of Energy, that it will take training out of the Department of Employment and that it will get rid of the industry component of the Department of Trade and Industry and let trade stand on its own.
There are many jobs that do not need to be done in the Government nowadays. However, there is much more work to be done by the Government on the quality of communications, and that was touched on in the statement yesterday. I welcome the investment in railways, but there are so many people on the roads, at least when I am there. I should like a more innovative approach between the Ministry of Transport and other Departments to discover what the Government can do to facilitate transportation. It is not as if the roads are not there. One has only to look around Westminster to see masses of bus lanes, most of which are empty at all times. Perhaps a traffic authority for London would be welcome.
Let us consider an area to the east of Westminster. Today, I went on a tour of docklands. One would think that that area was designed as if no one understood that the motor car had been invented. There is a need for co-ordination among Departments—the Treasury and the Departments of the Environment, of Trade and Industry and of Transport—of an order that has not yet been achieved.
Another area in which the Government are a catalyst is the Export Credits Guarantee Department. I hoped that the Treasury would understand the necessity for British companies to be able to export successfully to the new markets of eastern Europe, including the Union of Soviet Sovereign States and Mongolia which said, "We have got rid of the communists, but you seem to have forgotten us. We have China on our border." Those places do not have the cover necessary for us to be able to export to them, but there are some major opportunities there. The Germans and the French know that.

Mr. Quentin Davies: Does my hon. Friend agree that it is very demoralising and demotivating for industrialists if they feel that their Government are not prepared to back them in, for example, export credits at least to the extent to which their competitors in the other major western countries are being backed by their Governments?

Mr. Warren: I endorse my hon. Friend's remark. We are in a very competitive world, and where the Government are a catalyst, they must play the part that only Government can. I am not an interventionist, but there is no question but that there will be a problem with


ECGD and Iraq. I am certain that terrible losses will suddenly be revealed in trading with that country. However, the ECGD with its best endeavours believed that it should back companies that regarded Iraq as a good country to which to sell. I should not blame ECGD or the Government if major losses were announced suddenly. The point is that it was done, and the Government must support industry without qualification.
Another issue to consider is research, in which the Government are a sponsor in part if not in whole—certainly not in whole. Yesterday, the Chancellor announced a 3 per cent. increase in the research budget, which I welcome. However, it is worth mentioning the problem we face with the research base to ensure that industry—with the Government as catalyst through the ECGD and through the companies that I described earlier—achieves success during the next five to 15 years.
We have approximately the same population as Germany. The population of Japan is approximately double that of ours or Germany's and that of the United States is approximately double that of Japan. Let us consider the amount spent on research and development and acknowledge the fact that development usually accounts for 90 per cent. of all that is spent on research and development. There are some interesting figures which are worth retaining.
In the United Kingdom, we spend £212 a year per capita on research and development; the Germans spend £381, the Japanese £370 and the Americans £390. If we subtract from that the military component, the net amount spent on research and development in this country is £170 a year. In Germany the figure is £363, in Japan £368 and in the United States £379. In other words, we spend only 50 per cent. of the per capita spending of our major competitors.
If we add up the figures and take account of the volume of their populations, we discover that Germany is spending four times as much as we spend, Japan eight times as much and the United States 16 times as much. Of course, one cannot cover everything in one's research, but if we compare ourselves with, for instance, Germany, we realise that we must make greater efforts.
I hope that my right hon. and hon. Friends at the Treasury will consider what incentives they can generate in collaboration with trade and industry to encourage the further investment in research which we lack at the moment. We know that the research payback over 10 years is about three times that required from Japan, but the problem can be solved and I should like the next Government to tackle it. I have no doubt that a Conservative Government will be in office after the next election. I say that in apolitical terms, as I have heard the right hon. and learned Member for Monklands, East (Mr. Smith) today—it is inadequate for what is required for trade and industry.
The Government must understand that they are the largest single customer and they must therefore consider the way in which they purchase goods and services to make themselves a quality customer. What endears suppliers to Marks and Spencer and to Boeing and makes people queue up to sell to them is that they know that they are selling to quality customers and will be better off for that. That aim can be achieved. It would not be intervention but

an acknowledgement of the Government as a catalyst and an acknowledgement of the fact that there are things that only the Government can do.
I support the proposals in the Queen's Speech, and I believe that the amendment is as ridiculous as one would expect.

Mr. Geoffrey Robinson: It is always interesting to follow the hon. Member for Hastings and Rye (Mr. Warren). It is a pity that he will not continue to offer his services in Select Committee or in the Chamber. I feel that it must be something to do with his frustration with the Government over the past 10, 11 or 12 years, because his speech is in marked contradistinction to everything that they have said for most of that period. The Government have been singularly out of tune with the feelings and aspirations of manufacturing industry, which, as he says, wants not handouts but dialogue. It would perhaps go further and say that it wants above all an even playing field. We cannot allow the continuing exposure of our industry to unfair competitive practices which, as he knows from his experience as Chairman of the Select Committee on Trade and Industry, is very much par for the course in much of the industrial in-fighting.
The debate takes place against the background of the second deepest recession that the country has endured since the second world war. It is the second recession engendered by this Government. There has been immense social and industrial damage. Let us consider the social aspect. There have been 85,000 repossessions and 45,000 businesses have gone to the wall. Those of us who are close to our constituencies know what that means to the individuals with whom we deal at our surgeries and to our other contacts in industry. I shall not follow other hon. Members who have discussed the personal and social difficulties.
In the west midlands, we remain rooted in our conviction and commitment to the manufacturing sector. I emphasise the fact that, when we talk about manufacturing, it is not to denigrate the importance of the service industries such as tourism or banking. Indeed, Coventry city council—I have the honour to represent that area—has done an enormous amount to diversify and spread the manufacturing base with great success. I am sure that even my right hon. Friend the Member for Lianelli (Mr. Davies), who made a remarkable critique of the service sector and who tended by comparison rightly to emphasise the relatively greater importance of manufacturing, did not seek to downgrade the importance of the service sector. The most remarkable single achievement by this Government has been the creation of a recession on an unprecedented scale in both the servicing and manufacturing industries.
Our greatest charge against the Government is their malign neglect of manufacturing over the years. There has been no strategy to harness national resources along the lines suggested by the hon. Member for Hastings and Rye. There has been no attempt to have a dialogue with industry, or to use constructively the Government's purchasing power and interface with industry. All that is beyond them. We do not want them to do things that are almost intentionally designed to hurt the manufacturing sector. The hon. Member for Hastings and Rye referred to the attack, on the Export Credits Guarantee Department.


That was a Treasury-inspired attack which hurt one of the organisations that was still helping our exporters. Why does there have to be such an unnecessary, wanton attack upon a highly expert, professional and efficient organisation?
We know that the United Kingdom car industry is 22 per cent. down. I declare an interest in the Jaguar car company, which is located in my constituency. I am also the chairman of a company that is heavily involved in manufacturing. What a time to persevere with a 10 per cent. car tax. What a time to mount another attack on the benefits of having a company car. The attack has been mounted at a time when the industry is at rock bottom and when one of our prestige companies, privatised only a few years ago, is reeling under the collapse of its market in the United States. What a time to take on that industry and try to destroy it. It is a well-known statistic—I am sorry to have to mention it—that Jaguar sold only 64 vehicles in July of this year. Silly things like that inevitably lead to damaging consequences, from which Coventry and other industrial areas are still suffering.
If time permitted, I should have read from the excellent report that has been sent to all hon. Members by the Society of Motor Manufacturers and Traders. It points out that one of the highest levels of car tax in the world is levied on the British consumer. No wonder that car manufacturers were 22 per cent. down at home and that those which survive are suffering from enormous cash flow difficulties and have had to make many people redundant.
Another example is the privatisation of British Airways. I refer to the interface between Rolls-Royce and British Airways. Would any other country have allowed a whole new generation of large, 90,000-plus thrust turbine engines to be placed with a United States company? I cannot believe that any other country would have allowed that to happen. The Government washed their hands of it and said that it was no concern of theirs. The consequences for Rolls-Royce will be dire—they may even turn out to be terminal.
At one time, we had a market in machine tools, but there has been a 50 per cent. drop in orders and the industry is in dire straits. Again, almost indifferent, malign and neglectful policies are at work. Why abolish 100 per cent. capital allowances? They have good effects. They provide money much more quickly, therefore easing cash flow and profitability problems and the financial deficit of the corporate sector from which manufacturing industry is suffering. If the money comes back more quickly, there is every incentive to invest. We are still living with the consequences of the Government's abolition of 100 per cent. capital allowances.
The west midlands welcomes overseas investment. The Labour Government laid many of the foundations upon which successful investment here by the Japanese has been built. However, Japanese investment can never be a substitute for our own domestically owned manufacturing companies. We do not have control over research and development, or manufacturing technology, or product development. At the end of the day, we do not have control. We welcome Japanese investment. I have to declare an interest, in that I am trying to promote a joint venture in the United Kingdom with a Japanese company. We want that to happen, but that can be no substitute for having our own nationally owned industries.
This Government have managed to engineer the second deepest recession in the post-war period. The first was

between 1981 and 1983. If one took a view of that performance would as a manager, the Government's managerial performance have to be condemned as a dismal failure. The consequences should be dismissal. That is the sure and certain fate that awaits the Government whenever they have the courage to put their case to the electorate.

Mr. Roger King: I welcome the reference in the Gracious Speech to the fact that the Government intend to privatise some of the railway services. I look forward to the publication of the White Paper. The autumn statement reveals that the Government are determined to ensure that investment in rail and roads takes place. I am happy about both. We need a balanced investment programme for our transport infrastructure. However, road development has not been given sufficient priority. There should be adequate investment in our roads programme. Manufacturers in the west midlands and elsewhere in the country are increasingly adopting lean manufacturing techniques which require the arrival of goods as they are needed on the production line. No longer are there large amounts of stock from which to draw. If the product is not there at the right time, production stops. Investment must continue, if not accelerate, in our roads system. I shall look closely at the Department of Transport and make sure that investment in the roads goes ahead.
My hon. Friend the Member for Bromsgrove (Sir H. Miller) has been vociferous in previous debates in his defence of the motor car industry. I pay tribute to him for his work. He has become the chief executive of the Society of Motor Manufacturers and Traders. He will make an outstanding leader of the organisation and bring to it the benefit of his political knowledge, as well as an ability to speak on behalf of the industry.
The car industry has been mentioned by several speakers, but no hon. Member has referred to it in complimentary terms. The industry has performed outstandingly well over the past few years and has stepped up its exports. Without such a performance, the Chancellor's statement yesterday about exports having improved dramatically over the past few years would not have been possible. The industry has been able to expand its production tremendously because it is more productive and more competitive than ever before, and we are gaining the advantage of inward investment and the introduction to this country of Japanese manufacturing techniques. That advantage lies not only in the Japanese car factories setting up here, but in the transfer of manufacturing techniques to other United Kingdom car manufacturing companies—Rover is an outstanding example.
The kind of manufacturing techniques that the Japanese adopt are no secret. In some respects, we have refined them further. It is a vital part of our investment programme that Japanese manufacturing companies come to the United Kingdom. We have seen the continuing development of the Nissan plant in the north-east, and rising up on the borders between the west midlands and the east midlands is the massive Toyota factory near Derby. There is also the development of Honda's manufacturing facility at Swindon. By the year 2000, those three Japanese companies will produce nearly 1 million vehicles between them.
I give my hon. Friend the Minister of State a word of warning. One of the problems of manufacturing industry is not the need for greater acceptability in the export market, but a decline in domestic demand. That decline, which has gone on far too long, is attributable partly to the recent economic position of the country, which is now progressing quite satisfactorily, and partly to the high taxation on the British car. There is the special car tax and VAT, now amounting to 27·3 per cent., which is higher than in any other European country except one, and twice as high as the German level. It is significant that German car manufacturers produce almost 3 million cars a year. Because of their dynamic home market, they can produce cars for the world market, too.
I ask my hon. Friend the Minister—and my right hon. Friend the Chancellor of the Exchequer, when he prepares his Budget in March, or whenever—to ensure that the tax burden on the British car industry is reduced. When the companies dependent on inward investment—Nissan, Toyota and Honda—become established and their manufacturing plants are up and running, it will not profit us much if United Kingdom plants are in difficulty because of the lack of demand in the home market. We have to get the two activities in phase. I am looking for some reductions in tax in the next Budget. That will be vital for the progress of the British car industry, especially in the west midlands.
Alas, the truck industry is in a bad position at the moment—again, possibly because of the effects of the recession in British industry and in the rest of Europe. The problems are common and the truck manufacturing position is the worst since 1954. As the economy picks up, that is bound to improve.
Some significant threats hang over the British car industry. We have heard rumours that petrol tax may be increased to persuade both business people and ordinary users to choose more fuel-efficient cars. I give one warning about that, especially in the light of what was said by the hon. Member for Coventry, North-West (Mr. Robinson) about Jaguar. If petrol prices go up, there will be an even more reduced market for the cars made by Rolls-Royce, Jaguar, Aston Martin and other specialist car manufacturers.
We must be careful about embracing extra taxes on fuel. They may have a significant and disastrous knock-on effect, to the disadvantage of large sections of the British car industry. By all means let us use the 10 per cent. special car tax. Let us reduce taxation, not increase it. If we wanted to encourage customers to buy more fuel-efficient cars, we could reduce that tax or abolish it altogether for such cars. There is a great opportunity there.
The United Kingdom motor industry is our biggest manufacturing industry, and it is still in good health, but it needs help in the United Kingdom market. The retail sector is feeling the effects of a prolonged recession. Unless we re-establish demand and start building it up, we are likely to jeopardise the tremendous growth in exports that we have achieved.

Mr. Keith Vaz: Some things never change. Exactly a year ago, I was the last Back-Bench speaker in the six-day debate on the Queen's Speech, and

I was followed by my hon. Friend the Member for Copeland (Dr. Cunningham). I spoke at 9.6 pm. This year I have done a little better, in that I am speaking at 9.3 pm.
I am often told that, as the youngest Opposition Beck-Bench Member, I should know my place, so I have decided to keep my words of wisdom until the very end. When my hon. Friend the Member for Copeland speaks, he will be able to sum up most ably.
I reviewed my speech of last year, which is always dangerous because one finds oneself wanting to repeat so much of what one said the previous year. So much should have changed and so much has not changed. A year ago, we were in the middle of a Conservative party leadership election, and I predicted that, no matter whether the present Secretary of State for the Environment or the present Prime Minister won it, the result would be the same—the devastation of our basic industries would continue over the ensuing 12 months. That is precisely what has happened.
I want to speak briefly about the footwear and textile industries, because I believe that the measure of the success—or lack of it—of our economy is reflected in the way in which those two vital industries are run. Representing a Leicester constituency, I know just how important those two industries are to Leicester, Leicestershire and the east midlands. The east midlands accounts for almost 30 per cent. of all the textile jobs and about 40 per cent. of all the footwear jobs in this country.
The hon. Member for Harborough (Sir J. Farr) and I have spoken about these two industries in many debates. The hon. Gentleman is chairman of the all-party textile committee. He knows very well what has happened over the past months and years, because he and I constantly have to react at local level to the devastating cuts in jobs in those industries. I was present to hear the hon. Gentleman's speech, and I must say that I agree with his view that there should be immediate cuts in the level of interest that industry pays on the money that it borrows from the banks. Those in footwear and textiles believe that only in that way can they cling to what is left of their industries.
Since 1979, footwear and textile employment nationally has fallen by some 46 per cent. That represents the loss of 203,000 employees—15,000 per year, nearly 1,500 per month, 75 per working day or around 10 every hour. By the time the debate on the Gracious Speech is over, still more jobs will have been lost in those two basic industries.
My plea today is that the Government should look favourably on the industries because a favourable climate and favourable conditions are necessary to generate business for the kind of enterprise of which they are made up. The manufacturers' plea is that they simply cannot cope with the large number of imports that are coming into Britain.
I recently obtained a list of aid given by the Turkish Government to the Turkish textile industry. A maximum of 40 to 50 per cent. is available in grant aid, depending on the geographical location. In respect of customs duty or VAT, exemptions are granted for the importation of fixed assets where those assets are used in the textile industry. In terms of investment incentives, up to 100 per cent. of corporate tax relief is available in the year of investment, and 40 per cent. thereafter. In terms of subsidised finance, 11-year loans are normally granted at subsidised interest


rates and with four-year periods of grace. That is the kind of support that other countries give these two very important industries.
In Leicester and the east midlands, the industries do not want special treatment. They realise that they are private companies that need to compete, but they want to be able to compete fairly, and the way in which the Government have managed—or mismanaged—the economy has meant that they have suffered especially severely.
The knock-on effect is devastating. The closure of factories such as Corahs and Kemptons, in my constituency and in the constituency of the hon. Member for Harborough, have left whole families devastated. The history of the city of Leicester—and, indeed, the history of Nottingham and other east midlands cities—is enmeshed in the history of the footwear and textile industries. If the present trend, and the present rate of job loss, continue, in a decade and a half, there will be no footwear and textile industries left in Leicester. That is our serious message for the Government and the Leader of the House.
I know that my hon. Friend the Member for Copeland is eager to give us a summary of what has happened over the past six days, but I wish, none the less, to make a short plea about the banking system. It would be strange, after all, if I did not mention the Bank of Credit and Commerce International. The closure of the bank on 2 December and its liquidation will result in billions of pounds of lost export orders and will have the knock-on effect of causing more job losses and affecting a large number of depositors.
There are 40,000 BCCI depositors in this country. Some of them are sterling depositors, but the majority are non-sterling depositors. Nine hundred members of staff have lost their jobs over the past four months.
The depositors protection association has produced a Bill today, and it has sent copies to several hon. Members. Indeed, I understand that a copy has been sent to the Chancellor of the Exchequer. If the Government adopt that Bill as part of their legislative programme, that will benefit our economy.
In a modest way, that Bill would amend the Banking Act 1987 to raise the amount of money to be given to depositors when the deposit protection fund is triggered. The current limit of 75 per cent. of £20,000 is not sufficient. The Bill suggests that the figure should be raised to 75 per cent. of £75,000. The Bill's other main thrust is to ensure that non-sterling deposits are covered. That would be a direct benefit to the reputation to the City of London, because we have been very worried about the number of overseas investors who have threatened to withdraw their money from Britain because of the mean protection provided under the deposit protection legislation.
As I said, some things never change. I have spoken for a minute longer than I spoke last year. My one comfort is that next year I will be speaking not from the Opposition Back Benches, but from the Government Back Benches. Instead of making the last but one speech, my hon. Friend the Member for Copeland will be the Leader of the House and he will make the final speech. By this time next year, we will have a Labour Government.

Mr. Quentin Davies: I n my brief political life, I have experienced few things more unedifying than the sight and sound over the past few weeks of Labour Members hoping desperately that,

despite everything, somehow the recovery of the economy can be postponed, and scratching around frantically trying to find a nugget of bad news about the British economy. That will do them little good. When the general election comes, the recovery in the economy will be palpable and incontrovertible and the British electorate, as before, will take a view of the Government's record as a whole over the past 12 or 13 years. As has been recognised internationally, that record has been remarkable by international standards.
The British people will also look for policies that give them confidence in the future. There are some striking contrasts between our policies and those of the Labour party in economic and other areas. For example, the Labour party remains as it has been throughout its history—the party of high and higher taxation. We are committed over time to a reduction in the tax burden on the economy.
With regard to industrial relations, the Labour party appears to have learnt so little from its unhappy experiences of the 1970s. Labour is once again committed to reversing several crucial aspects of our trade union reforms, including the banning of secondary picketing.
We have already examined the minimum wage on many occasions in the House. There can be few policies so utterly perverse as the minimum wage. It is certain to bring substantial economic damage to the country, and it will not benefit those whom it is designed to help because since those people are, by definition, on the lowest incomes, they are beneficiaries of family credit and that would simply be reduced pound for pound in line with the minimum wage.
Above all, one great contrast between ourselves and the Labour party concerns inflation. That contrast has been made clear this evening. The Labour party never even mentions inflation. That is the most revealing point of all. Once again today, my right hon. Friend the Chancellor made an absolutely explicit commitment to achieve and to maintain price stability. My right hon. Friend, in his first speech as Prime Minister, made it absolutely clear that the central priority was to defeat inflation.
We never hear about inflation from the Opposition. All we hear about are policies that they have devised without taking account of the risks of inflation which inevitably would ensue if their policies were adopted—that is, their policies of higher borrowing, higher spending, and deliberately increasing the cost of industry, for example through the minimum wage proposals. The British people simply will not fall for that.
Inflation is a terrible scourge. It has a terrible human cost—a cost to those on fixed incomes and to those on private sector pensions which are not index linked. Inflation is a very cruel scourge for those most defenceless sections of the population. It also has a major social cost. Inflation inevitably causes everyone to panic because their real incomes are being eroded with every day, week and month that goes by. In a desperate attempt somehow to defend their real income, people find themselves almost forced into militancy and strife and into competitive strikes and competitive demands for increases in nominal wages to keep up with the terrible inflation that they are suffering. Socially, inflation is an extremely divisive and destructive disease.
Of course, inflation has fundamental economic costs. The fundamental economic costs that are referred to generally in text books concern the fact that inflation erodes the effectiveness of the price mechanism. Beyond that, it fundamentally changes the savings pattern of


people in the private and household sector. It means that no longer are people induced to invest in productive assets. They are looking for stores of value that will somehow hold their real value despite inflation. We suddenly find people investing in residential property, real estate of various kinds, gold, works of art and antiques—anything—but not in productive assets. Also, of course, inflation increases uncertainty in the economy.
Labour Front-Bench Members are not enjoying this, because they are rightly embarrassed by what I am saying. They have not even begun to address the dangers of inflation. They realise that that is an Achilles' heel of their policies, which will mean that they will be completely incredible during the general election.
Hon. Members are apparently agreed on the need for investment. We all talk about investment. I say "apparently" because the Opposition's policies would not generate a climate that is favourable to investment. Inflation is highly destructive, because investment depends on relative certainty or on a reduction in uncertainty within which investment decisions are taken. Anything that increases risk reduces the inducement to invest. Inflation creates a climate of uncertainty. It means that anybody who proposes to invest must look for even higher prospective returns to justify the enhanced risk.
The Government have recently taken two vital measures to reduce the risk surrounding investment decisions. The decision to join the exchange rate mechanism has effectively fixed the parity and has reduced the uncertainty of one of the major variables in investment decisions—the exchange rate. Anything that produces the danger of a revival of the hyperinflation that we saw under previous Labour Governments would, as automatically as night follows day, lead people not to invest who might otherwise do so. Hyperinflation would undermine the confidence of industry upon which this country's prosperity ultimately depends.
Nothing has been more revealing throughout the debate than the fact that the Opposition have not said anything to give the slightest sign that they have any understanding of the dangers of inflation. That lesson will be learned by those outside the House who listen to our debates and it will be taken into account when they come to take their important electoral decision next year.

Dr. John Cunningham: It is my duty to review the past six days of debate, which is a considerable challenge, but it is nice to begin with a point of agreement between the hon. Member for Stamford and Spalding (Mr. Davies) and myself. He was right—we did not enjoy his speech.
It is conventional to begin by referring to the speeches of the mover and seconder of the Loyal Address, and I do so with some pleasure. The right hon. Member for Worcester (Mr. Walker) has, on any test, enjoyed an outstanding parliamentary career, which may well continue in another place after the general election. His speech amused and engaged the House. His recent role in the Cabinet of the right hon. Member for Finchley (Mrs. Thatcher) must have seemed rather like walking with great care over the fine porcelain for which the city of Worcester

is famous. I suspect that occasionally the right hon. Gentleman deliberately cracked a few pieces just to remind the right hon. Lady that he was around.
The hon. Member for Thanet, South (Mr. Aitken) has always been an independent-minded Conservative. His speech again demonstrated his consistent commitment to the views that he holds. I thought, however, that as an old Etonian he was a somewhat unlikely herald of the classless society.
I should also like to pay my own tribute to those Members who are no longer with us. Alick Buchanan-Smith and I were neighbours in London. Early most mornings we would bump into each other when he was on his way for his regular morning swim, and I shall miss him. Alick was a most courageous and admirable man, and we shall all miss him here.
I also salute the courage and commitment of George Buckley throughout his life as a socialist who was taken from his family and from us much too soon.
No one, least of all you, Madam Deputy Speaker, could fail to miss the pugnacious Richard Holt. We always knew when he was in the Chamber, but I believe that even the sometimes irascible Richard would not have condoned the contemptible tactics of gratuitous abuse, innuendo and vilification that are being deployed against Ashok Kumar in the Langbaurgh by-election by both Conservatives and Liberals alike. It demeaned the Leader of the House to launch into such personal, abusive and unsubstantiated attacks on a Labour candidate. The Conservatives' losing campaigns have taken a very nasty turn, with undertones of racism that have no place in any decent political party. I believe, however, that Ashok Kumar will make history tonight and that his election victory will be to the great credit of the electors of Langbaurgh.
This is the 13th consecutive Gracious Speech from a Conservative Government. It is longer than most of its predecessors and more shallow. It is the first Gracious Speech from the Prime Minister and, in all honesty, it cannot be described as a blueprint for the classless society; nor is it a pathway for the more effective advancement of women. It completely fails to match the Prime Minister's fine words.
Of course, that should not surprise us, because the candour of the Secretary of State for Energy was disarming when he said recently on "Panorama" that the only difference between the right hon. Member for Huntingdon (Mr. Major) and the right hon. Member for Finchley was one of style, not substance—there has been a change in style, yes, but a change in substance, no. After almost one year in office, the Prime Minister is failing even his own tests. He has no mandate. He has twice run away from his premeditated attempts to plan opportunities to secure one.
The real issue for Britain is not what is included in the Gracious Speech or what is left out. The real issue is that a Gracious Speech was made at all when the whole country really wanted and expected a general election. The real issue is the need for a new programme and a new agenda for Britain from a Government with the authority of a fresh mandate from the people.

Mr. Winnick: Will my hon. Friend give way?

Dr. Cunningham: I am sorry, but I cannot give way. I have already given up 10 minutes of my time in the debate and it is incumbent on me to move on.
The Government are a deadbeat Government whose authority has been undermined by every recent test of public opinion, in local elections and in parliamentary elections. The Prime Minister and his party have failed to win a single one of the eight by-elections since the last Gracious Speech in November last year, and they will lose three more tonight.
Nothing betrayed the lack of courage in the Government more than the manner in which the electors learned that they were to be denied a choice of Government today at the ballot box. The news was sneaked out by telephone calls to sycophantic editors by the Secretary of State for Energy. Apparently, even that task could not be trusted to the chairman of the Conservative party.
The Gracious Speech attempts to wipe the slate clean of the record of the past 12 years. Ministers and their Back Benchers pretend that all that has gone before, everything that they got wrong, everything that they supported and everything that they drove through this House can be obliterated by a change of Prime Minister. They will fail in that attempt at deception. Even though the Tory party made history last year as the first group of politicians to make a monkey of the organ grinder, it simply will not get away with it.
So apparently we are to be treated to an orgy of de-Thatcherisation. Or are we? Poll tax, the right hon. Lady's flagship, certainly is a rotting hulk—that is true. Then and at other times Opposition Members said some pretty hard things about the right hon. Lady when she was Prime Minister. But they are not half as hard as the things that Tory Back Benchers are saying about her now.
The present Prime Minister's U-turn on poll tax is interesting. He was an unswerving supporter of poll tax in every vote in the House, including when he opposed the so-called Mates amendment on banding. He said of poll tax:
I believe the new system will prove enduring and a vast improvement on the status quo.
He said that at the Association of District Councils conference in 1988. He described the poll tax as
a very much fairer and more acceptable system
in a letter to one of his constituents in April 1990.
But later, when the right hon. Member for Huntingdon (Mr. Major) was running for the leadership of the Tory party his tone was different. He said:
I'll tell you about poll tax. We were bounced into it quickly because there was such a fuss about the rates in Scotland and we were bounced without thinking because of all the political fuss.
That is what he told the Daily Mail in November last year during the leadership election. He was also candid with the BBC "News at One" that same month. He said:
One of the reasons we got into difficulties with the community charge was being bounced into decisions before they were fully thought through and before we knew precisely how it would affect people and what it meant.
That was the Prime Minister of our country talking about how, as a Cabinet Minister, he allowed himself to be bounced into decisions. Honest John? That is what he said.
The Government guillotined poll tax in and they guillotined it out. Now they expect us and the country to accept that they intend to guillotine in the next Tory tax as well and to make the same mistakes all over again. In 12 years they have made local government finance a nightmare for taxpayers, for service providers, for voluntary organisations and for councillors—even their own councillors.
The Tories epitomised Santayana's definition of fanatics:
Those who redouble their efforts even when they have forgotten their aim.
No doubt those hon. Members who rushed into the Lobby to rush in the poll tax, those who proclaimed it around Britain with ringing declarations of undying support—[Interruption.]—and the right hon. Member for Croydon, South (Sir W. Clark), who is protesting from a sedentary position, was one of the leaders—are preparing to rush once more, uninformed, unprepared and underhand into the Lobby for its confused, capricious replacement. Their constituents will not forget their records.
The plain truth is that the windy rhetoric of the Tories on such issues cannot disguise their lack of any coherent philosophy for local government. Their proposals are devoid of sound principles and of any intellectual foundation. The poll tax fiasco expresses the weakness and the incompetence of the Tory Cabinet. They supported it to a man—and they are all men.
The Asylum Bill displays the sinister cynicism of the Government on issues of race and ethnic origin. No one wants the entry of bogus asylum seekers into Britain and the fraudulent applicant must clearly be rejected, but the genuine applicant fleeing persecution has historically been offered protection by our country and the Government's proposals contain the real danger that that will no longer be the case.
It is the height of hypocrisy for the Gracious Speech to state that the aim of legislation is simply to enable
applications for asylum in the United Kingdom to be dealt with quickly and effectively.
The game is given away by the tabloid newspapers, which are such sycophantic supporters of the Government and deliberately choose to confuse asylum with immigration. If that is the Government's intention, why do they not take up the offer from the General Council of the Bar to enter into discussions on devising a speedy and just system of appeals?
The Government are engaging in scaremongering of the most squalid nature simply because a general election is approaching.
Throughout the past 12 years, Conservative Government have regularly pledged to the House and the country solutions to problems. In six of their 12 Queen's Speeches, they said that they would provide an efficient economy—they have failed. On six occasions they said that they would solve the problem of unemployment—it is worse than ever before. In six of their Queen's Speeches they said that it was their intention to improve the quality of our children's education—it is in decline. They said that they would improve the national health service on six occasions and they have finally admitted that they have been underfunding it. They said that they would tackle crime more effectively in eight of the past 12 years—crime is at all-time record levels after 12 years of the incompetent failure of the Conservative party. In 12 out of 12 years they have given firm commitments to their party for the
Their failures in each of those areas have been abysmal and are far too numerous to elaborate upon in this debate, but I shall examine one or two of them.
This year, for the seventh time, the Government tell us that they want to improve the quality of our children's education—that is our children, because their children do


not go into the state system. I choose my words with care. They do not send their children to the schools that they have been meddling with all these years.
Why do the Government persist in the policy of spending millions of pounds of our money—taxpayers' money—on their discredited city technology colleges when our schools suffer from a grave lack of resources? They are spending 50 times more on each child in the CTC than they do on each child in a school in Cumbria in my constituency. How can they defend that? They have allowed Cumbria to spend only £150 per pupil, while CTCs have received £7,450 per pupil from the taxpayer. That is a sign of the Tory party's priorities.
Is it that Cumbria's children lack talent or initiative? Of course not. Pupils at Wyndham school in Egremont in my constituency have won awards for science and technology. One group of young women has been given a national award for the design of an incubator unit for use in the third world. The truth is that state schools throughout the country, not just in Cumbria, are full of talented, able children who are being denied opportunities because of the Government's policies.
One small rural primary school in Lamplugh in my constituency has won several national awards and other school children could win more, given the opportunity. Cumbria is facing millions of pounds worth of cuts in its education spending as a direct result of the Government's policies, as are education authorities the length and breadth of the country. It is a scandalous waste of talent.
Education is not the only example of the Government's neglect. In the 12 months since the last Queen's Speech, unemployment has risen by 780,000-plus—a 50 per cent. rise. The Government, doubtless feeling that the increase, in the words of the Chancellor of the Exchequer, is "a price well worth paying", could not even bring themselves to mention unemployment in the text of one of the longest Queen's Speeches we have seen in recent times. There was not a mention of the plight of the unemployed.
The pattern of the Queen's Speeches over 12 years on unemployment is instructive. In the early 1980s, during the first recession, the Government expressed "concern" at rising unemployment and pledged to tackle it. In the past four years, they have had to fall back on saying that they will increase employment. This year, they obviously feel that there is nothing credible that remains for them to say on their record of rising unemployment. I fear that they are right.
On the eve of 1992, this year of all years, the Queen's Speech should have had at its heart measures to reduce the unemployment which now afflicts every region of the country and every sector of employment.
What is even more worrying is the acute rise in youth unemployment. Almost 300,000 more young people have become unemployed since this recession began. This Queen's Speech offers nothing for the young jobless in my constituency in Cumbria or in the country as a whole. I can assure you, Mr. Speaker, that young people will not forget what the Government have done to them, their job opportunities and their career prospects.
Britain's credibility in Europe is, not surprisingly, again in question. Far from being at the heart of Europe, Britain is once again being left behind—the Bruges group on one side and the Chichester group on the other, pulling the

Prime Minister first this way and then that. The Foreign Secretary dances to one tune one day and to another the next, while our country's best interests are pushed aside. As the crucial Maastricht conference approaches, neither at home nor abroad is there a clear, consistent view of where the Tory Government stand. Last year at this time on Europe the Tory party was the prisoner of its Prime Minister. This year its Prime Minister is a prisoner of his own party.
The Gracious Speech is dominated by attempts to clear up the Tory economic incompetence and the manic ideology of the past 12 years. It has been contradicted on public expenditure within a week by yesterday's political opportunism in the autumn statement. On the question of financing public expenditure, why is it that, in the past 24 hours, on three occasions the Chancellor of the Exchequer and on three occasions the Leader of the House have been asked to spell out the Government's plans on VAT and on six occasions they have not had the courage to answer once either my right hon. and learned Friend the shadow Chancellor of the Exchequer or my right hon. Friend the leader of the Labour party?
All that is the work of a Prime Minister who, after a year in office is—to use one of his favourite cricketing metaphors—a nightwatchman. He is a caretaker who will not last. He says that he wants women in his Cabinet—but not yet. He says that he wants Britain at the heart of Europe—but not yet. He says that he wants to abolish poll tax—but not yet. He says that he wants to reform the DTI and put the right hon. Member for Henley (Mr. Heseltine) in charge—but not yet. He says that he wants a mandate of his own—[HON. MEMBERS: "But not yet."] As a cricketing friend said to me:
I wouldn't have him in my team—he has a terrible propensity to no balls".
Under the right hon. Gentleman, the Tory party's bogus claims are on auto-destruct. House sales have become repossessions and business starts have become insolvencies. The state intervenes in every school, hospital and town hall.
Britain needs a new hope for the 1990s and a new agenda that will give people opportunities. They will never achieve those advances and opportunities with a tired and discredited Tory party in power. We look forward to the next Gracious Speech, because we shall write it.

The Lord President of the Council and Leader of the House of Commons (Mr. John MacGregor): I join the hon. Member for Copeland (Dr. Cunningham) in paying tribute to my right hon. Friend the Member for Worcester (Mr. Walker) and my hon. Friend the Member for Thanet, South (Mr. Aitken), who proposed and seconded the Loyal Address. I also join him in paying tribute to Alick Buchanan-Smith who was a personal friend of mine, as he was of so many, and who was an outstanding parliamentarian and Minister, and to the courage of George Buckley. We were all sorry to hear of the death of Richard Holt, who made a big mark in this House and put Langbaurgh on the map.
I reject absolutely any charges of racism on the part of anyone in the Tory party in the Langbaurgh campaign. We have been drawing attention to the defects of the Labour party campaign, and I shall give just one example. The Labour candidate, quite fairly and reasonably, bought shares in British Telecom. The Leader of the Opposition


defended his freedom to do so. The point that we were making in drawing attention to it was that, if the Labour party had been in power, he would not have had the freedom to buy shares in BT. That is a perfectly fair point to make.
I begin, as I did last time, with brief but important references to one of the matters that comes within my sphere of responsibility—parliamentary reform. The Government are committed to sustaining the momentum of parliamentary reform. We place the emphasis on practical reforms that deliver real improvements in the management of the House, conditions for Members and working practices. This Session will see the new House management committees introduced, and, following the report by Sir Robin Ibbs, in operation for the first time.
We are now at phase one of the new parliamentary buildings—the first stage of a long-overdue improvement in accommodation facilities for Members. Much more needs to be done, but I shall always endeavour to turn a sympathetic ear to changes that will enable us to serve our constituents more effectively.
The pace of reforms to working practices is also hotting up. The Government's emphasis is on practical measures, on changes that will work to improve the hours that we sit and the effectiveness of parliamentary procedure. I expect to be able to report to the House soon the results of the review of the first year of the new European Standing Committees after the Select Committee on Procedure has reported. However, it is already clear that they are a real success, with enhanced scrutiny, better debate and, perhaps most noticeable, a reduction in the number of late-night debates on the Floor of the House. We have had seven in 1991, compared with 27 in 1990 and 37 in 1989.
The Transport and Works Bill will be a major step forward in the reform of antiquated, obscure private Bill procedures and should reduce by about half the number of private Bills that come before the House, while improving procedures in the area that deal with them.
The Select Committee on the Hours of Sitting, chaired by my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), is carrying forward its work with vigour and enthusiasm. [HON. MEMBERS: "Slow down."] I have a great deal to say. I gave evidence to that Committee this week, and we all await conclusions with interest. I still believe that reforms in working practices and hours of sitting are essential to improve our ability to serve our constituents and our effectiveness as a legislature. I promise the House a full opportunity to debate the report from the Committee. I also promise that the Government will look seriously at all proposals for sensible reform.

Mr. Rhodri Morgan: rose——

Mr. MacGregor: Like the hon. Member for Copeland, I have reduced my time considerably, so I will not give way.
I wish at the outset to concentrate on three astonishing features of the debate, the first being the speech of the right hon. and learned Member for Monklands, East (Mr. Smith). The right hon. Member for Lagan Valley (Mr. Molyneaux) and my right hon. Friend the Member for Guildford (Mr. Howell) got it absolutely right. The right hon. Member for Lagan Valley said that he was not clear whether the right hon. and learned Gentleman had

finished or was still giving way, and my right hon. Friend referred to what looked like only the first half of his speech.
It was clear that the right hon. and learned Gentleman had astonishingly little to say, and nothing at all to say about Labour policies. Indeed, he failed totally to answer the two questions that were asked of him, and I know why. He does not want to be probed on questions of public expenditure relating to the Labour party and its tax proposals. That has been a big feature of today's debate, so I want to take the matter a bit further.

Mr. Morgan: rose——

Mr. MacGregor: No, I will not give way. [Interruption.] I will deal with VAT. It was not necessary to spell it out, because the existing public expenditure plans are based on existing tax rates, with the allowances and excise duties indexed in the normal way. That is spelled out clearly.

Mr. Morgan: rose——

Mr. MacGregor: I am not giving way.
I understand why the right hon. and learned Gentleman could not wait to resume his seat—in case he was asked again about expenditure. So let us try again. We know that the Labour party is committed to an increase in child benefit and pensions, covered by its eight new or increased taxes, a point that has featured in the debate.
We have heard throughout the past year from one Labour Member after another about how their areas of spending have a high priority. The Leader of the Opposition said:
Top place will go to the health services.
The hon. Member for Copeland promises:
Education is our first priority.
We had none of those commitments from the right hon. and learned Member for Monklands, East, although he said that education and training would be key priorities.
In one policy document, the Labour party says:
A hugely increased programme encouraging energy conservation and efficiency is given priority.
In another, Labour says:
First priority will be substantial extra investment in London on extra buses, tubes and trains.
In yet another, Labour says:
Returning water to the public sector is a priority.
That would not be cheap. For the hon. Member for Dagenham (Mr. Gould), thousands of millions of extra pounds spent on housing would be an immediate solution to the homeless problem. He has also said that the Labour party was already committed to
the rapid development of regional development agencies." 
The hon. Member for Cynon Valley (Mrs. Clywd) said:
Reaching the United Nation's aid target is a top priority.
I have left out the biggest spender of the lot, the hon. Member for Oldham, West (Mr. Meacher), who, every time he gets to his feet in the House, commits the Labour party to further increased spending on the social services.

Mr. Jeff Rooker: Nothing of the kind.

Mr. MacGregor: It is all very well for the hon. Gentleman to say that. He should read what his hon. Friend has said. The Leader of the Opposition said the other day, talking about education:


We will continue with the scale of commitment at least at the level of 1979. That means, year on year, sustaining the commitment instead of letting it be eroded.
We know that that would cost an extra £2·6 billion. The right hon. and learned Member for Monklands, East immediately tried to suppress that, and that is indicative of the battle that is going on in the Labour party—[Interruption.] It was said by the Leader of the Opposition himself.

Mr. Morgan: rose——

Mr. MacGregor: I will not give way.
That is why we have costed the Labour party programme in the document which I have with me. It amounts to an extra £35 billion. They are all spending pledges given by Labour Members. They are all listed, and not one of them has been denied.
Nor can the right hon. and learned Member for Monklands, East claim that it would come from growth, because growth is already assumed in our plans. He knows that it would be a real-terms increase on top of inflation. That is why, on the costing basis, we are right to say that it represents another 10p in the pound on basic income tax. [Interruption.] I want to hear from the right hon. and learned Member for Monklands, East, because the Opposition must now come clean.
Which is it—massive increases in normal basic income tax, or does the Labour party intend to reject all the spending plans with which it has conned the electorate by saying that it will engage in them? It is a massive con trick—[Interruption.] Or will Labour go back to very large Government borrowing, on the scale that occurred in one year under the last Labour Government, of 9·5 per cent. of GDP and a PSBR of £55 billion?
Yesterday, we heard another commitment from the Labour party. We heard that it does not intend to cap any local authority. That was a clear commitment. So, in addition to the high increases in taxation that the Labour party would impose if it was ever given a chance, the community charge payer, or the council tax payer, would be ripped apart by high-spending Labour authorities, because there would be no capping. The Labour party has failed to answer those questions. Clearly their measures would be hugely inflationary.
Another astonishing feature of the debate was pointed out by my hon. Friend the Member for Stamford and Spalding (Mr. Davies). None of the speeches of Opposition Front-Bench spokesmen has mentioned the importance of achieving, as we have done, and sustaining, as we are determined to do, a low rate of inflation. I am not surprised. Labour's record in office and its current policies would be hugely inflationary.
On Europe, the Leader of the Opposition gave a long answer during the Queen's Speech debate on 31 October. It was not as long as his previous answer on economic and monetary union, but it was close. In that answer, he said absolutely nothing until my right hon. Friend the Chancellor pinned him down and asked what positive extra policies the Labour party would commit itself to. He said:
When I say that the Government are not positive, that is because they have sought no undertakings on regional policy, growth policy or employment policy."—[Official Report, 31 October 1991; Vol. 198, c. 22.]

By talking about those three areas, the right hon. Gentleman clearly underlines the fact that the Labour party has nothing to say about economic and monetary union.
Surprisingly, the Labour party document on Europe says:
The completion of the single market contains the potential for great opportunities.
However, in November 1986, the Leader of the Opposition said that the single market would be
a political failure of such magnitude that it may well endanger the future development and cohesion of the Community.
That shows his understanding of European matters. He was wrong then, he is wrong now, and he will be wrong in the future.
The only clearly distinctive point that the Opposition have made about convergence is:
Labour's supply-side policies are the policies necessary for real convergence.
It was the Labour party's supply-side policies, including its industrial relations policies—all of which we had to reverse—which did such damage in the 1970s. Our supply-side policies achieved the growth of the 1980s.
On employment, the Labour party would sign up for a massive extension of Community competence and majority voting in the name of the social charter. Those ill thought out policies would add massively to the burden on employers and reduce profitability and employment.
On growth, the Labour party ignores the evidence of independent forecasters that, on top of the substantial growth rates that we have achieved in the 1980s, our growth rate will be just as good as the G7 average and faster than Germany's in the second half of next year. That is not just our forecast; it is the IMF's forecast.
The third element of European policy that the Leader of the Opposition accused us of ignoring was regional policy. As one of my hon. Friends pointed out today, it is typical that, when finally pushed into a corner and forced to be specific, the Leader of the Opposition picked for unqualified Labour party support the one area of European Community policy that would cost this country. An increase in regional aid would benefit other countries far more than us and would drive up our net contribution to the budget. In other words, we would be paying for it. That is why, although the Labour party is changing its stance on Europe and is still deeply divided, it still has nothing constructive to say about the future of economic and monetary union.
The right hon. and learned Member for Monklands, East talked about our record. He used some statistics about what has been happening to jobs and businesses recently. I remind the House and the country that, over our 12 years of office, every day 800 more households have become home owners, nearly 100 extra new businesses have been established—they are all net increases—and nearly 200 new jobs have been created. Our policies will extend that fine record throughout the 1990s.
The shadow Chancellor criticised the investment performance of British industry. Again, he was wrong. Despite the recession, which my right hon. Friend the Chancellor made clear is coming to an end, our national wealth is 23 per cent. up on 1979, and business investment is up 27 per cent. As my right hon. Friend the Chancellor said, there was a massive increase in business investment in the three years up to 1989. Currently, business investment accounts for a higher proportion of GDP than at any time


in the 1970s and early 1980s. Business investment remains high, and the latest CBI survey reported a sharp improvement in manufacturers' investment intentions.
United Kingdom manufacturing output is 25 per cent. higher than it was 10 years ago. United Kingdom manufactured exports have been increasing faster than world trade. After decades of decline, the United Kingdom's share of manufactured exports of developed nations has increased from 7·5 per cent. to almost 9 per cent. in the past five years. Those are the facts about the state of manufacturing industry, and industrial disputes are at the lowest for half a century. To answer the shadow Chancellor, this summer, the director general of the CBI said:
Virtually everything associated with our manufacturing base is better than it was in the era of Government interference, lost orders, strikes and roaring inflation.
No prizes for guessing when that was. It was when the industrial policies of the Labour party were being pursued, to our damage, in the 1970s.
Government spending of more than £2·6 billion in 1992–93 on enterprise and vocational education is two and a half times more in real terms than in 1978–79. Companies are spending record sums of some £20 billion on training per year, and the CBI survey shows an increase in the year ahead, with more than 80 per cent. of manufacturers expecting to spend as much or more on training in the next 12 months. That is what the right hon. and learned Member for Monklands, East means by cuts.
Almost 1 million people will be helped back to work in the coming year by employment and training programmes. We need to take no lectures from Labour Members. I remind them that we are spending two and a half times as much on training and enterprise as they did. When they left office, they were training 6,000 young people. This year, we shall train more than 250,000. If the right hon. and learned Member for Monk lands, East were concerned about employment and training, he would be prepared to condemn the TUC boycott of the employment action, youth training and TEC programmes. He has been asked before: will he now do so?
It is no wonder that the right hon. and learned Member for Monklands, East does not want to hear the facts about Government spending on science and technology. The autumn statement shows that spending on science and technology in 1992–93 will be almost £6 billion. That is substantial investment in science and technology.
I shall take no lessons from the right hon. and learned Gentleman on education, because the Government's record has been extremely good. In the past 12 years, there has been a record increase in spending per pupil—up 42 per cent. in schools. His comparisons with the city technology colleges did not bear water. More young people are staying on after 16 than ever before. More and more are getting good grades in GCSE and A-levels. Above all, our record on the numbers entering higher education, universities and polytechnics is outstandingly good—one out of eight of the relevant age group in 1979, one out of four now. Not only are numbers increasing every year but most students qualify in universities and polytechnics, whereas in other countries that have similar numbers entering higher education there is a much higher wastage rate.
The results of our education reforms and improvements in the 1980s are being shown by the way in which our young people are leaving higher education with qualifications. One in four is very much better than before.
The Opposition cannot add up. They make promises that they have no way of sustaining. They have no commitment to the control of inflation. Their approach to European matters involves policies that are not at all in the interests of British industry. The Government's record is outstandingly good. The Queen's Speech will carry it forward and, when the time comes, I am certain that the electorate will choose our policies.

Question put, That the amendment be made:

The House divided: Ayes 193, Noes 323.

Division No. 2]
[10 pm


AYES


Abbott, Ms Diane
Foulkes, George


Adams, Mrs Irene (Paisley, N.)
Fraser, John


Allen, Graham
Galloway, George


Alton, David
Garrett, John (Norwich South)


Archer, Rt Hon Peter
Garrett, Ted (Wallsend)


Ashdown, Rt Hon Paddy
Gilbert, Rt Hon Dr John


Ashley, Rt Hon Jack
Godman, Dr Norman A.


Ashton, Joe
Golding, Mrs Llin


Banks, Tony (Newham NW)
Gordon, Mildred


Barnes, Harry (Derbyshire NE)
Gould, Bryan


Barnes, Mrs Rosie (Greenwich)
Graham, Thomas


Beckett, Margaret
Grant, Bernie (Tottenham)


Beith, A. J.
Griffiths, Nigel (Edinburgh S)


Bellotti, David
Griffiths, Win (Bridgend)


Benn, Rt Hon Tony
Grocott, Bruce


Bennett, A. F. (D'nt'n &amp; R'dish)
Hain, Peter


Bermingham, Gerald
Harman, Ms Harriet


Bidwell, Sydney
Haynes, Frank


Blair, Tony
Heal, Mrs Sylvia


Boateng, Paul
Healey, Rt Hon Denis


Bradley, Keith
Henderson, Doug


Brown, Gordon (D'mline E)
Hinchliffe, David


Brown, Ron (Edinburgh Leith)
Hoey, Kate (Vauxhall)


Caborn, Richard
Hogg, N. (C'nauld &amp; Kilsyth)


Callaghan, Jim
Home Robertson, John


Campbell, Menzies (Fife NE)
Howell, Rt Hon D. (S'heath)


Campbell-Savours, D. N.
Howells, Geraint


Canavan, Dennis
Howells, Dr. Kim (Pontypridd)


Carr, Michael
Hoyle, Doug


Cartwright, John
Hughes, John (Coventry NE)


Clarke, Tom (Monklands W)
Hughes, Roy (Newport E)


Cohen, Harry
Hughes, Simon (Southwark)


Corbett, Robin
Hume, John


Corbyn, Jeremy
Ingram, Adam


Cox, Tom
Johnston, Sir Russell


Crowther, Stan
Jones, Barry (Alyn &amp; Deeside)


Cryer, Bob
Jones, Martyn (Clwyd S W)


Cunningham, Dr John
Kaufman, Rt Hon Gerald


Darling, Alistair
Kennedy, Charles


Davies, Rt Hon Denzil (Lianelli)
Kilfoyle, Peter


Davies, Ron (Caerphilly)
Kinnock, Rt Hon Neil


Davis, Terry (B'ham Hodge H'I)
Kirkwood, Archy


Dixon, Don
Lamond, James


Dobson, Frank
Leadbitter, Ted


Duffy, Sir A. E. P.
Leighton, Ron


Dunnachie, Jimmy
Lestor, Joan (Eccles)


Dunwoody, Hon Mrs Gwyneth
Lewis, Terry


Eadie, Alexander
Litherland, Robert


Edwards, Huw
Livingstone, Ken


Evans, John (St Helens N)
Livsey, Richard


Ewing, Mrs Margaret (Moray)
Lloyd, Tony (Stretford)


Faulds, Andrew
Loyden, Eddie


Fearn, Ronald
McAllion, John


Field, Frank (Birkenhead)
McAvoy, Thomas


Fields, Terry (L'pool B G'n)
McGrady, Eddie


Fisher, Mark
McKay, Allen (Barnsley West)


Flannery, Martin
McKelvey, William


Flynn, Paul
McLeish, Henry


Foot, Rt Hon Michael
Maclennan, Robert


Foster, Derek
McMaster, Gordon






McWilliam, John
Ross, Ernie (Dundee W)


Madden, Max
Rowlands, Ted


Mahon, Mrs Alice
Ruddock, Joan


Marek, Dr John
Salmond, Alex


Marshall, David (Shettleston)
Sedgemore, Brian


Marshall, Jim (Leicester S)
Sheerman, Barry


Martin, Michael J. (Springburn)
Sheldon, Rt Hon Robert


Martlew, Eric
Shore, Rt Hon Peter


Meacher, Michael
Skinner, Dennis


Meale, Alan
Smith, Andrew (Oxford E)


Michael, Alun
Smith, C. (Isl'ton &amp; F'bury)


Michie, Bill (Sheffield Heeley)
Smith, Rt Hon J. (Monk'ds E)


Michie, Mrs Ray (Arg'l &amp; Bute)
Snape, Peter


Mitchell, Austin (G't Grimsby)
Soley, Clive


Morgan, Rhodri
Spearing, Nigel


Morley, Elliot
Steel, Rt Hon Sir David


Morris, Rt Hon A. (W'shawe)
Steinberg, Gerry


Morris, Rt Hon J. (Aberavon)
Stott, Roger


Murphy, Paul
Straw, Jack


Nellist, Dave
Taylor, Mrs Ann (Dewsbury)


Oakes, Rt Hon Gordon
Vaz, Keith


O'Hara, Edward
Wallace, James


O'Neill, Martin
Walley, Joan


Orme, Rt Hon Stanley
Wardell, Gareth (Gower)


Patchett, Terry
Wareing, Robert N.


Pike, Peter L.
Watson, Mike (Glasgow, C)


Powell, Ray (Ogmore)
Williams, Rt Hon Alan


Prescott, John
Williams, Alan W. (Carm'then)


Primarolo, Dawn
Wilson, Brian


Quin, Ms Joyce
Winnick, David


Randall, Stuart
Wise, Mrs Audrey


Redmond, Martin
Worthington, Tony


Rees, Rt Hon Merlyn
Wray, Jimmy


Richardson, Jo
Young, David (Bolton SE)


Robertson, George



Robinson, Geoffrey
Tellers for the Ayes:


Robinson, Peter (Belfast E)
Mr. Ken Eastham and Mr. Jack Thompson.


Rogers, Allan



Rooker, Jeff





NOES


Adley, Robert
Browne, John (Winchester)


Aitken, Jonathan
Bruce, Ian (Dorset South)


Alexander, Richard
Buck, Sir Antony


Alison, Rt Hon Michael
Burns, Simon


Amery, Rt Hon Julian
Burt, Alistair


Amess, David
Butcher, John


Amos, Alan
Butler, Chris


Arbuthnot, James
Butterfill, John


Arnold, Jacques (Gravesham)
Carlisle, Kenneth (Lincoln)


Arnold, Sir Thomas
Carrington, Matthew


Ashby, David
Carttiss, Michael


Aspinwall, Jack
Cash, William


Baker, Nicholas (Dorset N)
Chalker, Rt Hon Mrs Lynda


Baldry, Tony
Channon, Rt Hon Paul


Banks, Robert (Harrogate)
Chapman, Sydney


Batiste, Spencer
Chope, Christopher


Beggs, Roy
Churchill, Mr


Bellingham, Henry
Clark, Dr Michael (Rochford)


Bendall, Vivian
Clark, Rt Hon Sir William


Bennett, Nicholas (Pembroke)
Conway, Derek


Benyon, W.
Coombs, Anthony (Wyre F'rest)


Biffen, Rt Hon John
Coombs, Simon (Swindon)


Blackburn, Dr John G.
Cope, Rt Hon Sir John


Blaker, Rt Hon Sir Peter
Cormack, Patrick


Body, Sir Richard
Couchman, James


Bonsor, Sir Nicholas
Cran, James


Boscawen, Hon Robert
Currie, Mrs Edwina


Boswell, Tim
Curry, David


Bottomley, Peter
Davies, Q. (Stamf'd &amp; Spald'g)


Bottomley, Mrs Virginia
Davis, David (Boothferry)


Bowden, A. (Brighton K'pto'n)
Day, Stephen


Bowden, Gerald (Dulwich)
Dickens, Geoffrey


Bowis, John
Dicks, Terry


Boyson, Rt Hon Dr Sir Rhodes
Dorrell, Stephen


Braine, Rt Hon Sir Bernard
Douglas-Hamilton, Lord James


Brandon-Bravo, Martin
Dover, Den


Brazier, Julian
Dunn, Bob


Bright, Graham
Durant, Sir Anthony


Brown, Michael (Brigg &amp; Cl't's)
Dykes, Hugh





Emery, Sir Peter
Kirkhope, Timothy


Evans, David (Welwyn Hatf'd)
Knapman, Roger


Evennett, David
Knight, Greg (Derby North)


Fairbairn, Sir Nicholas
Knight, Dame Jill (Edgbaston)


Farr, Sir John
Knowles, Michael


Favell, Tony
Knox, David


Fenner, Dame Peggy
Lamont, Rt Hon Norman


Finsberg, Sir Geoffrey
Latham, Michael


Fishburn, John Dudley
Lawrence, Ivan


Fookes, Dame Janet
Lawson, Rt Hon Nigel


Forsyth, Michael (Stirling)
Lee, John (Pendle)


Forsythe, Clifford (Antrim S)
Leigh, Edward (Gainsbor'gh)


Forth, Eric
Lennox-Boyd, Hon Mark


Fowler, Rt Hon Sir Norman
Lester, Jim (Broxtowe)


Fox, Sir Marcus
Lloyd, Peter (Fareham)


Franks, Cecil
Lord, Michael


Freeman, Roger
Luce, Rt Hon Sir Richard


French, Douglas
Lyell, Rt Hon Sir Nicholas


Fry, Peter
McCrindle, Sir Robert


Gale, Roger
Macfarlane, Sir Neil


Gardiner, Sir George
MacGregor, Rt Hon John


Gill, Christopher
MacKay, Andrew (E Berkshire)


Gilmour, Rt Hon Sir Ian
Maclean, David


Glyn, Dr Sir Alan
McLoughlin, Patrick


Goodhart, Sir Philip
McNair-Wilson, Sir Michael


Goodlad, Alastair
McNair-Wilson, Sir Patrick


Goodson-Wickes, Dr Charles
Madel, David


Gorman, Mrs Teresa
Malins, Humfrey


Gorst, John
Mans, Keith


Grant, Sir Anthony (CambsSW)
Maples, John


Greenway, Harry (Ealing N)
Marland, Paul


Greenway, John (Ryedale)
Marlow, Tony


Gregory, Conal
Marshall, John (Hendon S)


Griffiths, Sir Eldon (Bury St E')
Marshall, Sir Michael (Arundel)


Griffiths, Peter (Portsmouth N)
Martin, David (Portsmouth S)


Grist, Ian
Mates, Michael


Ground, Patrick
Maude, Hon Francis


Hamilton, Rt Hon Archie
Mawhinney, Dr Brian


Hamilton, Neil (Tatton)
Maxwell-Hyslop, Robin


Hampson, Dr Keith
Mayhew, Rt Hon Sir Patrick


Hannam, John
Mellor, Rt Hon David


Hargreaves, A. (B'ham H'll Gr')
Meyer, Sir Anthony


Hargreaves, Ken (Hyndburn)
Miller, Sir Hal


Harris, David
Mills, Iain


Haselhurst, Alan
Miscampbell, Norman


Hawkins, Christopher
Mitchell, Andrew (Gedling)


Hayes, Jerry
Mitchell, Sir David


Hayhoe, Rt Hon Sir Barney
Moate, Roger


Hayward, Robert
Molyneaux, Rt Hon James


Heath, Rt Hon Edward
Monro, Sir Hector


Heathcoat-Amory, David
Montgomery, Sir Fergus


Heseltine, Rt Hon Michael
Moore, Rt Hon John


Hicks, Mrs Maureen (Wolv' NE)
Morris, M (N'hampton S)


Hicks, Robert (Cornwall SE)
Morrison, Sir Charles


Higgins, Rt Hon Terence L.
Moss, Malcolm


Hill, James
Moynihan, Hon Colin


Hind, Kenneth
Mudd, David


Hogg, Hon Douglas (Gr'th'm)
Neale, Sir Gerrard


Hordern, Sir Peter
Nelson, Anthony


Howarth, G. (Cannock &amp; B'wd)
Neubert, Sir Michael


Howe, Rt Hon Sir Geoffrey
Newton, Rt Hon Tony


Howell, Rt Hon David (G'dford)
Nicholls, Patrick


Howell, Ralph (North Norfolk)
Nicholson, David (Taunton)


Hughes, Robert G. (Harrow W)
Norris, Steve


Hunt, Rt Hon David
Onslow, Rt Hon Cranley


Hunt, Sir John (Ravensbourne)
Oppenheim, Phillip


Hunter, Andrew
Page, Richard


Irvine, Michael
Paice, James


Jack, Michael
Parkinson, Rt Hon Cecil


Janman, Tim
Patnick, Irvine


Jessel, Toby
Patten, Rt Hon Chris (Bath)


Johnson Smith, Sir Geoffrey
Patten, Rt Hon John


Jones, Gwilym (Cardiff N)
Pattie, Rt Hon Sir Geoffrey


Jones, Robert B (Herts W)
Pawsey, James


Jopling, Rt Hon Michael
Peacock, Mrs Elizabeth


Kellett-Bowman, Dame Elaine
Porter, Barry (Wirral S)


Key, Robert
Porter, David (Waveney)


Kilfedder, James
Portillo, Michael


King, Roger (B'ham N'thfield)
Powell, William (Corby)


King, Rt Hon Tom (Bridgwater)
Price, Sir David






Raffan, Keith
Taylor, Ian (Esher)


Raison, Rt Hon Sir Timothy
Taylor, Sir Teddy


Rathbone, Tim
Tebbit, Rt Hon Norman


Redwood, John
Temple-Morris, Peter


Renton, Rt Hon Tim
Thatcher, Rt Hon Margaret


Rhodes James, Sir Robert
Thompson, Patrick (Norwich N)


Riddick, Graham
Thorne, Neil


Ridley, Rt Hon Nicholas
Thornton, Malcolm


Ridsdale, Sir Julian
Thurnham, Peter


Roe, Mrs Marion
Townend, John (Bridlington)


Ross, William (Londonderry E)
Townsend, Cyril D. (B'heath)


Rost, Peter
Tracey, Richard


Rowe, Andrew
Tredinnick, David


Rumbold, Rt Hon Mrs Angela
Trippier, David


Ryder, Rt Hon Richard
Twinn, Dr Ian


Sackville, Hon Tom
Vaughan, Sir Gerard


Sainsbury, Hon Tim
Viggers, Peter


Sayeed, Jonathan
Waldegrave, Rt Hon William


Shaw, David (Dover)
Walden, George


Shaw, Sir Giles (Pudsey)
Walker, Bill (T'side North)


Shaw, Sir Michael (Scarb')
Walters, Sir Dennis


Shelton, Sir William
Ward, John


Shephard, Mrs G. (Norfolk SW)
Wardle, Charles (Bexhill)


Shepherd, Colin (Hereford)
Warren, Kenneth


Shepherd, Richard (Aldridge)
Watts, John


Shersby, Michael
Wells, Bowen


Sims, Roger
Wheeler, Sir John


Skeet, Sir Trevor
Whitney, Ray


Smith, Tim (Beaconsfield)
Widdecombe, Ann


Soames, Hon Nicholas
Wiggin, Jerry


Speed, Keith
Wilkinson, John


Speller, Tony
Wilshire, David


Spicer, Sir Jim (Dorset W)
Winterton, Mrs Ann


Spicer, Michael (S Worcs)
Winterton, Nicholas


Stanbrook, Ivor
Wolfson, Mark


Stanley, Rt Hon Sir John
Wood, Timothy


Steen, Anthony
Woodcock, Dr. Mike


Stern, Michael
Yeo, Tim


Stevens, Lewis
Young, Sir George (Acton)


Stewart, Allan (Eastwood)
Younger, Rt Hon George


Stewart, Rt Hon Sir Ian



Stokes, Sir John
Tellers for the Noes:


Summerson, Hugo
Mr. David Lightbown and Mr. John M. Taylor.


Tapsell, Sir Peter

Question accordingly negatived.

Amendment proposed, pursuant to Standing Order No. 32 ( Calling of amendments at end of debate), at the end of the Question to add:

'but humbly regret that the Gracious Speech failed to present any coherent policy to secure for the people of the United Kingdom the full benefits of the economic, monetary and political union of the European Community and furthermore fails to contain any constructive proposal to combat environmental pollution; regret the inadequacy of the educational reforms proposed in the Gracious Speech to provide for higher standards and wider opportunity in the educational system; further regret the inclusion in the Speech of a measure to replace the unjust poll tax with a regressive and administratively cumbersome council tax rather than a more equitable local income tax; and finally regret the absence of any commitment to comprehensive reform of the institutions of government including Parliaments for Scotland and Wales, a Bill of rights and, in particular, in the last Gracious Speech before the general election any proposal to reform the electoral system for local, Westminster and European elections despite the deficiencies in the current system, which distorts the wishes of the people and produces divisive governments supported by only a minority of the electorate.'—[Mr. Beith]

Question put, That the amendment be made:—

The House divided: Ayes 19, Noes 320.

Division No. 3]
[10.14 pm


AYES


Alton, David
Bellotti, David


Ashdown, Rt Hon Paddy
Campbell, Menzies (Fife NE)


Barnes, Mrs Rosie (Greenwich)
Carr, Michael


Beith, A. J.
Cartwright, John





Ewing, Mrs Margaret (Moray)
Michie, Mrs Ray (Arg'I &amp; Bute)


Fearn, Ronald
Salmond, Alex


Howells, Geraint
Steel, Rt Hon Sir David


Hughes, Simon (Southwark)



Johnston, Sir Russell
Tellers for the Ayes:


Kennedy, Charles
Mr. James Wallace and Mr. Archy Kirkwood.


Livsey, Richard



Maclennan, Robert





NOES


Adley, Robert
Dicks, Terry


Aitken, Jonathan
Dorrell, Stephen


Alexander, Richard
Douglas-Hamilton, Lord James


Alison, Rt Hon Michael
Dover, Den


Amery, Rt Hon Julian
Dunn, Bob


Amess, David
Durant, Sir Anthony


Amos, Alan
Dykes, Hugh


Arbuthnot, James
Emery, Sir Peter


Arnold, Jacques (Gravesham)
Evans, David (Welwyn Hatf'd)


Arnold, Sir Thomas
Evennett, David


Ashby, David
Fairbairn, Sir Nicholas


Aspinwall, Jack
Farr, Sir John


Baker, Nicholas (Dorset N)
Favell, Tony


Baldry, Tony
Fenner, Dame Peggy


Banks, Robert (Harrogate)
Finsberg, Sir Geoffrey


Batiste, Spencer
Fishburn, John Dudley


Beggs, Roy
Fookes, Dame Janet


Bellingham, Henry
Forsyth, Michael (Stirling)


Bendall, Vivian
Forsythe, Clifford (Antrim S)


Bennett, Nicholas (Pembroke)
Forth, Eric


Benyon, W.
Fowler, Rt Hon Sir Norman


Biffen, Rt Hon John
Fox, Sir Marcus


Blackburn, Dr John G.
Franks, Cecil


Blaker, Rt Hon Sir Peter
Freeman, Roger


Body, Sir Richard
French, Douglas


Bonsor, Sir Nicholas
Fry, Peter


Boscawen, Hon Robert
Gale, Roger


Boswell, Tim
Gardiner, Sir George


Bottomley, Peter
Gill, Christopher


Bottomley, Mrs Virginia
Gilmour, Rt Hon Sir Ian


Bowden, A. (Brighton K'pto'n)
Glyn, Dr Sir Alan


Bowden, Gerald (Dulwich)
Goodhart, Sir Philip


Bowis, John
Goodlad, Alastair


Boyson, Rt Hon Dr Sir Rhodes
Goodson-Wickes, Dr Charles


Braine, Rt Hon Sir Bernard
Gorman, Mrs Teresa


Brandon-Bravo, Martin
Gorst, John


Brazier, Julian
Grant, Sir Anthony (CambsSW)


Bright, Graham
Greenway, Harry (Ealing N)


Brown, Michael (Brigg &amp; Cl't's)
Greenway, John (Ryedale)


Browne, John (Winchester)
Gregory, Conal


Bruce, Ian (Dorset South)
Griffiths, Sir Eldon (Bury St E')


Buck, Sir Antony
Griffiths, Peter (Portsmouth N)


Burns, Simon
Grist, Ian


Burt, Alistair
Ground, Patrick


Butler, Chris
Hamilton, Rt Hon Archie


Butterfill, John
Hamilton, Neil (Tatton)


Carlisle, Kenneth (Lincoln)
Hampson, Dr Keith


Carrington, Matthew
Hannam, John


Carttiss, Michael
Hargreaves, A. (B'ham H'll Gr')


Cash, William
Hargreaves, Ken (Hyndburn)


Chalker, Rt Hon Mrs Lynda
Harris, David


Channon, Rt Hon Paul
Haselhurst, Alan


Chapman, Sydney
Hawkins, Christopher


Chope, Christopher
Hayes, Jerry


Clark, Dr Michael (Rochford)
Hayhoe, Rt Hon Sir Barney


Clark, Rt Hon Sir William
Hayward, Robert


Conway, Derek
Heath, Rt Hon Edward


Coombs, Anthony (Wyre F'rest)
Heathcoat-Amory, David


Coombs, Simon (Swindon)
Heseltine, Rt Hon Michael


Cope, Rt Hon Sir John
Hicks, Mrs Maureen (Wolv' NE)


Cormack, Patrick
Hicks, Robert (Cornwall SE)


Couchman, James
Higgins, Rt Hon Terence L.


Cran, James
Hill, James


Cryer, Bob
Hind, Kenneth


Currie, Mrs Edwina
Hogg, Hon Douglas (Gr'th'm)


Curry, David
Hordern, Sir Peter


Davies, Q. (Stamf'd &amp; Spald'g)
Howarth, G. (Cannock &amp; B'wd)


Davis, David (Boothferry)
Howe, Rt Hon Sir Geoffrey


Day, Stephen
Howell, Rt Hon David (G'dford)


Dickens, Geoffrey
Howell, Ralph (North Norfolk)






Hughes, Robert G. (Harrow W)
Page, Richard


Hunt, Rt Hon David
Paice, James


Hunt, Sir John (Ravensbourne)
Parkinson, Rt Hon Cecil


Hunter, Andrew
Patnick, Irvine


Irvine, Michael
Patten, Rt Hon Chris (Bath)


Jack, Michael
Patten, Rt Hon John


Janman, Tim
Pattie, Rt Hon Sir Geoffrey


Jessel, Toby
Pawsey, James


Jones, Gwilym (Cardiff N)
Peacock, Mrs Elizabeth


Jones, Robert B (Herts W)
Porter, Barry (Wirral S)


Jopling, Rt Hon Michael
Porter, David (Waveney)


Kellett-Bowman, Dame Elaine
Portillo, Michael


Key, Robert
Powell, William (Corby)


Kilfedder, James
Price, Sir David


King, Roger (B'ham N'thfield)
Raffan, Keith


King, Rt Hon Tom (Bridgwater)
Raison, Rt Hon Sir Timothy


Kirkhope, Timothy
Rathbone, Tim


Knapman, Roger
Redwood, John


Knight, Greg (Derby North)
Renton, Rt Hon Tim


Knight, Dame Jill (Edgbaston)
Rhodes James, Sir Robert


Knowles, Michael
Riddick, Graham


Knox, David
Ridley, Rt Hon Nicholas


Lamont, Rt Hon Norman
Ridsdale, Sir Julian


Latham, Michael
Robinson, Peter (Belfast E)


Lawrence, Ivan
Roe, Mrs Marion


Lawson, Rt Hon Nigel
Ross, William (Londonderry E)


Lee, John (Pendle)
Rost, Peter


Leigh, Edward (Gainsbor'gh)
Rowe, Andrew


Lennox-Boyd, Hon Mark
Rumbold, Rt Hon Mrs Angela


Lester, Jim (Broxtowe)
Ryder, Rt Hon Richard


Lloyd, Peter (Fareham)
Sackville, Hon Tom


Lord, Michael
Sainsbury, Hon Tim


Luce, Rt Hon Sir Richard
Sayeed, Jonathan


Lyell, Rt Hon Sir Nicholas
Shaw, David (Dover)


Macfarlane, Sir Neil
Shaw, Sir Giles (Pudsey)


MacGregor, Rt Hon John
Shaw, Sir Michael (Scarb')


MacKay, Andrew (E Berkshire)
Shelton, Sir William


Maclean, David
Shephard, Mrs G. (Norfolk SW)


McLoughlin, Patrick
Shepherd, Colin (Hereford)


McNair-Wilson, Sir Michael
Shepherd, Richard (Aldridge)


McNair-Wilson, Sir Patrick
Shersby, Michael


Madel, David
Sims, Roger


Malins, Humfrey
Skeet, Sir Trevor


Mans, Keith
Skinner, Dennis


Maples, John
Smith, Tim (Beaconsfield)


Marland, Paul
Soames, Hon Nicholas


Marlow, Tony
Speed, Keith


Marshall, John (Hendon S)
Speller, Tony


Marshall, Sir Michael (Arundel)
Spicer, Sir Jim (Dorset W)


Martin, David (Portsmouth S)
Spicer, Michael (S Worcs)


Maude, Hon Francis
Stanbrook, Ivor


Mawhinney, Dr Brian
Stanley, Rt Hon Sir John


Maxwell-Hyslop, Robin
Steen, Anthony


Mayhew, Rt Hon Sir Patrick
Stern, Michael


Mellor, Rt Hon David
Stevens, Lewis


Meyer, Sir Anthony
Stewart, Allan (Eastwood)


Miller, Sir Hal
Stewart, Andy (Sherwood)


Mills, Iain
Stewart, Rt Hon Sir Ian


Miscampbell, Norman
Stokes, Sir John


Mitchell, Andrew (Gedling)
Summerson, Hugo


Mitchell, Sir David
Tapsell, Sir Peter


Moate, Roger
Taylor, Ian (Esher)


Molyneaux, Rt Hon James
Taylor, Sir Teddy


Monro, Sir Hector
Tebbit, Rt Hon Norman


Montgomery, Sir Fergus
Temple-Morris, Peter


Morris, M (N'hampton S)
Thatcher, Rt Hon Margaret


Morrison, Sir Charles
Thompson, Patrick (Norwich N)


Moss, Malcolm
Thorne, Neil


Moynihan, Hon Colin
Thornton, Malcolm


Mudd, David
Thurnham, Peter


Neale, Sir Gerrard
Townend, John (Bridlington)


Nelson, Anthony
Townsend, Cyril D. (B'heath)


Neubert, Sir Michael
Tracey, Richard


Newton, Rt Hon Tony
Tredinnick, David


Nicholls, Patrick
Trippier, David


Nicholson, David (Taunton)
Twinn, Dr Ian


Norris, Steve
Vaughan, Sir Gerard


Onslow, Rt Hon Cranley
Viggers, Peter


Oppenheim, Phillip
Waldegrave, Rt Hon William





Walden, George
Wilshire, David


Walker, Bill (T'side North)
Winterton, Mrs Ann


Walters, Sir Dennis
Winterton, Nicholas


Ward, John
Wolfson, Mark


Wardle, Charles (Bexhill)
Wood, Timothy


Warren, Kenneth
Woodcock, Dr. Mike


Watts, John
Yeo, Tim


Wells, Bowen
Younger, Rt Hon George


Wheeler, Sir John



Whitney, Ray
Tellers for the Noes:


Widdecombe, Ann
Mr. David Lightbown and Mr. John M. Taylor.


Wiggin, Jerry



Wilkinson, John

Question accordingly negatived.

Main Question put and agreed to.

Resolved,

That an humble Address be presented to Her Majesty, as follows:

Most Gracious Sovereign,

We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

To be presented by Privy Councillors or Members of Her Majesty's Household.

Mrs. Wise: On a point of order, Mr. Speaker. You will be aware of the special report from the Select Committee on Health which I believe will be automatically referred to the Privileges Committee but which, at the moment, is the property of this House. I am sure that the House, with its customary generosity, would be prepared to listen to a personal statement from the hon. Member for Esher (Mr. Taylor) if he cares to explain how he came to keep quiet about his possession at a crucial time of a confidential Committee paper. I would like——

Mr. Speaker: Order. Let me make the position absolutely clear to the House. Following a decision of the House in 1986, whenever a Select Committee makes a special report to the effect that its work has been substantially interfered with as a result of premature disclosure of its proceedings, that report automatically stands referred, as the hon. Member for Preston (Mrs. Wise) has said, to the Privileges Committee. The special report from the Select Committee on Health is now therefore in the hands of the Privileges Committee, and it cannot be discussed.

Mrs. Wise: Further to the point of order, Mr. Speaker.

Mr. Speaker: Order. No points of order arise from that. That is a ruling.

Mrs. Wise: With respect, Mr. Speaker, and on a point of order. I was not asking for a debate and I want to make that quite clear. I am asking——

Mr. Speaker: Order. We cannot discuss it, because the matter is in the hands of the Privileges Committee. We must not prejudice in any way what that Committee is going to do about this matter. Depending on the Privileges Committee's decision, there may well be a debate, and that will be the moment to discuss it.

Orders of the Day — Thames Flood Alleviation Scheme

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wood.]

Mr. Tim Smith: rose——

Several Hon. Members: rose——

Mr. Speaker: Order. We are now on the Adjournment debate. I cannot take any points of order on the previous matter. I have ruled upon it.

Mr. Smith: I am grateful to have the opportunity to raise the subject of the Maidenhead, Windsor and Eton flood alleviation scheme. I am particularly pleased to see present my hon. Friend the Member for Windsor and Maidenhead (Sir A. Glyn), who obviously has a major interest in this matter.
The National Rivers Authority has applied for planning permission to build a seven-mile flood alleviation channel to the east of the River Thames. The channel would start just upstream from Bolter's Lock at Maidenhead. It would run through Taplow, crossing the main A4 road between Slough and Maidenhead and the main London to Bristol railway line, through Dorney, crossing the M4 motorway to Eaton Wick. It would run to the north of Eton Wick and the south of Chalvey along the south side of the M4, crossing the main A355 Slough to Windsor road. It would rejoin the River Thames some distance downstream from Eton and Windsor.
According to the planning application, which is dated January 1991, the estimated overall cost of the scheme is £51 million. I understand that that estimate has now risen to £58 million. I am sure that you will agree, Mr. Speaker, that, by any yardstick, that is a very large amount of taxpayers' money. The NRA should be required to justify that expenditure in a public forum where its arguments can be fully considered and its proponents cross examined. I have great faith in locally-elected planning committees, but I do not believe that they are in a position to scrutinise the NRA's proposals in the comprehensive way that that proposed expenditure clearly warrants. That is why I am today requesting the Secretary of State to call in that planning application so that there can he a full public inquiry at which all the issues can be properly considered.
According to the NRA, the net present value of the damage that would be caused by flooding, and hence the benefit accruing, has been calculated using a number of variables, and generally lies between £41 million and £69 million. A comparison of the benefit with the cost produces an average benefit-cost ratio of 1·2:1. That figure is recognised as satisfactory by the NRA and is within the limits required by the Ministry of Agriculture, Fisheries and Food. The ratio is produced by comparing the implementation costs of £45 million with the average benefit figure of £55 million.
A public inquiry would be able to examine those figures in detail. Questions could be asked about the failure of the NRA to include in its cost estimate the sum of £6 million of taxpayers' money that it has already spent promoting the scheme, or it could consider any of the indirect costs arising from the construction of the channel. Neither cost element has been included in the estimate. The NRA simply says that it is not the practice in the industry to assign to any scheme the costs of economic disruption

during its construction. There will, however, be substantial costs of that kind. All the affected roads which are already very busy at peak times are to be diverted. It is inconceivable that those diversions will not cause traffic delays.
Then there are the environmental costs. According to the director of planning services of South Buckinghamshire district council, the environmental impact could be severe. He has expressed extreme concern about the nuisance which would be caused during the construction of the bridges to take the channel under the A4, the M4 and the London to Bristol railway line. By the NRA's own admission, noise levels around those areas would be in excess of 75 dB(A).
Although the NRA has not included indirect costs whether economic or environmental, it has included indirect benefits in its estimate of the total benefits of the scheme. That apparent lack of symmetry could also be challenged at a public inquiry. Questions could be asked about the so-called Maidenhead factor, which relates to the apparently higher level of affluence of the population that is likely to be affected by a flood than elsewhere in the United Kingdom.
The Maidenhead factor was exemplified by claims that were made after the flood in February 1990. At one property, an indoor swimming pool collapsed because its floor level was below the flood level. The cost was £12,000. At another property, the ground floor swimming pool and a jacuzzi were badly damaged. The cost was £14,000. The residential damages have been multipled by a suitable factor in recognition of the so-called Maidenhead factor. The question for a public inquiry is whether that is a sensible way of calculating the direct benefit.
Indirect benefit includes matters such as the loss of trading profit incurred by businesses in the area and the effects of traffic disruption and diversions. The cost of traffic delays on the M4 and major roads has been estimated at £1·3 million. More controversially, the NRA claims that the channel will be an environmental asset and will have value in terms of recreation and amenity. A value of £3 million has been used for that purpose. The latest figures presented to the regional flood defence committee on 26 July show a total scheme cost of £58 million and a total net present value of benefits of £56 million, producing a benefit-cost ratio of 0·97. However, the first benefits from the scheme are not attainable for sometime after the start of expenditure. When this phasing is taken into consideration, the benefit-cost ratio falls further to 0·85.
The National Rivers Authority is, in theory, accountable to Parliament through the Secretary of State for the Environment, but the financial accountability for a scheme such as this falls elsewhere. First, there is the Ministry of Agriculture. If the scheme is to qualify for grant aid, the benefit-cost assessment must show that the present value of all the benefits derived from the scheme exceed the present value of all the costs. This procedure is fine as far as it goes, but it precludes the consideration of alternative schemes which may be more cost-effective and cannot, by definition, provide a public forum in which the cost and benefit figures can be challenged.
Secondly, there is the regional flood defence committee, whose members will be expected to come up with the lion's share of the cash. That committee has already rubber-stamped the scheme but, to be fair, it is in no position to challenge it. Buckinghamshire county council has to stump up 3·8 per cent. of the cash, but jointly


appoints a representative to the committee with Bedfordshire and Essex. So Buckinghamshire is in no position to challenge the mighty NRA. Who is? That is the question.
I know that the National Audit Office has been carrying out a value-for-money study of NRA coast protection schemes. In that connection, it has employed independent consultants to assess the NRA's work, but there has been no independent assessment of this scheme. The NAO did, however, look at it at my request. It concluded:
The scheme will probably be marginal on the basis of tangible costs and benefits
and
Intangible benefits will be critical to the justification of the scheme.
The NAO also said:
The assessment of intangibles is an inexact science and we are sure the Ministry will look closely at these aspects.
Mr. Peter Bowl was navigation inspector in charge of No. 3 district—Marlow bridge to Staines bridge—from March 1960 to November 1984. He says that there is an alternative to the flood relief scheme, and that is to improve the drainage capacity of the Thames itself by removing obstructions and restrictions to flow which tend to increase river levels, especially when the watercourse is bank full and the weirs fully open.
Then there is a channel called the "York stream", which runs through Maidenhead. I have some pictures of it here, which I want to show to my hon. Friend. He will see that there is no flow. The York stream is either stagnant or it has dried up completely. Why? If the obstructions and restrictions to flow had been removed and if the York stream had been flowing, I doubt whether any part of Maidenhead would have been flooded in 1990. Yet it is on that flood and the damage to swimming pools and jacuzzis caused by it that the NRA relies so heavily to demonstrate the existence of a so-called Maidenhead factor.
All these—and many more—are questions for a public inquiry. The planning sub-committee of Buckinghamshire county council, which meets on Monday to consider the scheme, must inevitably confine itself to the planning application before it, and the planning issues arising from it. I should, however, make it clear that the matters to which I have referred are more than sufficient on their own to justify outright rejection. That is also the view of the Dorney and Taplow parish councils and the South Buckinghamshire district council.
The district council objects to the proposed channel because it involves development in the green belt and within a local landscape area. It would affect the character of the green belt. Its construction would be likely to result in excessive noise emissions, vibrations and generation of dust to the detriment of amenity, and the winning and working of minerals in this location would be contrary to the Buckinghamshire replacement minerals local plan.
The Dorney and Taplow parish councils naturally share those concerns. In addition, the Dorney council agrees with me that the fundamental question is whether the channel is needed. The council observes that the estimated total cost, including preliminary expenses, has now risen to in excess of £63 million, and that that does not include the costs of disruption during the construction period. The council has also noted the lack of water in the York stream in Maidenhead and questions the adequacy

of flow in the flood relief channel. On the NRA's own admission, there will be an inadequate flow in one in three years, and no flow at all in one in 10.
The Taplow council has expressed particular concern about the disruption of the A4 Slough to Maidenhead road that construction of the channel will cause. It points out that, while the planning application lays great emphasis on the disruptive effects of a flood, it attaches less importance to the disruptive effects of building a new river. The parishes of Taplow, Dorney and Burnham, which will also be affected, form a green lung between the suburban sprawl of Slough and Maidenhead. This is fragile landscape to which the threat is one of continuous urban development between the two towns.
On Monday the scheme will be considered by the planning sub-committee of Buckinghamshire county council. A panel appointed to consider the scheme will recommend to that committee that the planning application should be referred to the Secretary of State. According to the panel, a key piece of information sought is the need for the project. The panel is minded to agree that the application is for a project of immense scale and impact and should be determined only after a far-reaching public inquiry.
The panel could support such a project contrary to the county structure plan and the south Buckinghamshire local plan only if satisfied on three counts: first, that the need is abundantly clear; secondly, that the way of tackling the flooding problem as set out in the application is undoubtedly the best of all possible alternatives; and thirdly, that a wide variety of outstanding issues are each resolved in the best possible way. These would include access, environmental disturbance and noise, water levels and assured flow for water sweetening and so on.
In summary, this is a massive infrastructure project on which it is proposed to spend £58 million of taxpayers' money. While there is clearly a potential flooding problem which needs to be addressed, the case for this relief channel has not been made. It is doubtful whether the claimed benefits justify the substantial costs. These are matters which can be determined only by a public inquiry and I hope, therefore, that the Secretary of State will agree to call the planning application in.

Sir Alan Glyn: I agree that all the facts which my hon. Friend the Member for Beaconsfield (Mr. Smith) has said are contained in the 1991 paper are true. However, he and I differ in a fundamental way. In 1947, 1954, 1959, 1974 and 1990—particularly in 1947—the flooding in Maidenhead was extensive. We had to have waders and tractors to go through the streets. The damage done was considerable. We must look for a scheme that will ensure that that does not happen again.
I agree with my hon. Friend that, if the Berkshire and Buckinghamshire county councils disagreed, the Minister could call the application in if he wished. If the councils did not disagree, he could call it in anyway.
I agree with my hon. Friend to this extent—a public inquiry may be necessary. It is a large sum of money and it is especially favourable to Maidenhead and not to his constituents, I will give him that.
My hon. Friend the Member for Beaconsfield has already enlarged upon the facts in the fine document which


was produced in 1991 and I can only assume that they are correct. The crux of the matter is, how do we prevent a 1947 or 1990 flood occurring again? It is a question of which side of the river you take—the Maidenhead or the Buckinghamshire side. On the Maidenhead side, it would mean considerable expense and demolition of properties—it would be much more expensive. Again I agree with my hon. Friend, if that money is to be expended it might be a good thing if there were a public inquiry.
I humbly suggest that the two counties should get together. If they cannot agree, there will have to be a public inquiry. If they agree and the Minister thinks that matters should be re-examined, I think that he has the power—correct me if I am wrong—to call them in.
I suggest that we proceed along those lines and look for the most economic way to alleviate my constituents' problems while not doing too much damage to my hon. Friend's constituents. Unfortunately, Maidenhead has suffered greater damage than Buckinghamshire, and obviously we take the matter much more seriously. If we can proceed along a sensible line and if Buckinghamshire and Berkshire county councils lock their heads together and produce a worthwhile scheme, that is fine. If they cannot agree it will have to go to a public inquiry. In any case it is always up to the Minister.
As my hon. Friend says, the scheme is expensive. It costs £59 million—it is not tuppence—but I think that it is worthwhile. If the Minister does not consider it worth while, all he has to do is call it in and either have a public inquiry or decide for himself whether it is a good scheme. A public inquiry might be more beneficial because, as my hon. Friend said, it would bring out the details of the scheme.
We have suffered grave and terrible damage. I can remember going about in waders, with tractors trying to get houses dry. I can remember the damage to furniture and carpets, which was immense in 1974. In 1947, it was even worse. It will happen again, whatever anybody says. It happens roughly every ten years.
Are we entitled to spend such a sum of money or not? The right thing is for the two counties to get together and to make a joint decision and, if necessary, to have a public inquiry or to leave it to the Minister to call the scheme in if he is not satisfied. I realise that there are several faults in it, which affect my hon. Friend, but on balance it is a good scheme and should be adopted.

Mr. Nigel Spearing: I am grateful to the hon. Member for Beaconsfield (Mr. Smith) for allowing me to intervene briefly in this debate.
I am a vice-president of the River Thames Society, which is the administrative society for the whole river. Such a scheme would not only affect the constituents of the hon. Member for Beaconsfield and the hon. Member for Windsor and Maidenhead (Sir A. Glyn). If the planning application is persisted with, I support the plea for calling it in, for the reasons given by the hon. Member for Beaconsfield.
I also declare another non-commercial interest as one of the members of the Thames Traditional Boat Society, which is concerned with the maintenance, preservation and use of the traditional hand-propelled craft of the Thames—dinghies, skiffs, canoes and punts.
Both hon. Gentlemen explained the balance of public consideration to be taken into account. Two other matters weigh in the direction of a public inquiry. The scheme is one for an imaginatively landscaped, artificial but natural-looking, additional channel to parallel the Thames. That brings in the matter of recreational use—angling or, perhaps, boating. The present scheme excludes boats propelled by oar, pole and paddle. There is the matter of future planning and the effect on structural plans for the area. Most important, although hitherto unmentioned, are the possible effects of flooding or otherwise downstream of the flood relief area. If water is moved more quickly from one area, what are the effects downstream?
Those are wide-ranging and sometimes technical matters. Even if the two counties agree, this should be a matter for a call-in. Therefore, I am pleased to support this plea.

The Parliamentary Under-Secretary of State for the Environment (Mr. Tim Yeo): I pay tribute to my hon. Friend the Member for Beaconsfield (Mr. Smith), who is always an eloquent champion of his constituents' interests. He is also a noted expert on financial matters, and tonight he has given the House a clear explanation of complex proposals. I have no doubt that his opinion will carry great weight.
We have also heard from my hon. Friend the Member for Windsor and Maidenhead (Sir A. Glyn), who has unparalleled knowledge of the history of the area and the occasions when floods have affected it. I am grateful, too, for the comments of the hon. Member for Newham, South (Mr. Spearing).
The Maidenhead, Windsor and Eton areas have been subject to flooding from the River Thames for generations. The floods of 1947 were the worst on record, when 2,000 homes were flooded. Since then, considerable development has taken place, and a similar flood today would affect no fewer than 5,500 houses.
The scheme proposed by the National Rivers Authority is designed to prevent flooding caused by a repeat of the 1947 event. A flood on that scale is probable once every 56 years. If it happened again today, 5,500 properties would be affected, of which 260 are in Buckinghamshire, in the parishes of Dorney and Taplow. There are also about 180 properties in the flood plain in Buckinghamshire, and others in Berkshire with either floor levels above the flood level or even on dry land islands that would be completely surrounded by flood water. It is also likely that power and water supplies would be disrupted. A repeat of the 1947 flood across a wide area on the River Thames would cause chaos to those properties and to all communications. Roads in and out of Buckinghamshire would be flooded and telephone lines severely disrupted.
The National Rivers Authority has been preparing proposals to deal with this for six years. The solution involves the construction of a flood relief channel seven miles in length between Taplow and Eton on the border between Buckinghamshire and Berkshire. The NRA is paying particular attention to the environmental aspects. It has made an environment assessment, and its proposals are designed to enhance the environmental interest of the area.
The width of the channel to be provided would normally be 30 m, but in places would exceed 100 m. The construction of that channel will require the excavation of a very large quantity of sand and gravel. It will take about four years to complete, and is expected to coincide closely with the widening of the M4 and M25 motorways. It is clear that there will be considerable disruption locally during construction.
The planning applications were initially made to the three district councils directly affected. Because of the scale of the proposals, and because they would result in the excavation of large quantities of gravel, it has been agreed that the application would be dealt with by the two county councils. They are supported by a very detailed environmental assessment.
In preparing the scheme, the NRA consulted extensively with the local authorities and other bodies, local residents and landowners. About 25 requests for a public inquiry have been received, and Buckinghamshire county council has received about 200 letters objecting to it. Consultations on the scheme have been carried out by Berkshire county council. South Buckinghamshire district council has objected on a number of grounds. The proposals for constructing the channel have also been found to conflict with proposals being prepared for widening the M4. Discussions are taking place among the Department of Transport, the NRA and the two county councils to reconcile the two proposals. In the meantime, the two county councils have deferred consideration of the proposals, and the Department of Transport has lodged a formal objection to the National Rivers Authority's compulsory purchase order.
The compulsory purchase order falls to MAFF to confirm under section 151 of the Water Act 1989. There have been 43 objections to the compulsory purchase order and although a number have been resolved, a substantial number are still outstanding. If the NRA cannot resolve them, it will be for MAFF to hold an inquiry under section 13 of the Acquisition of Land Act 1981. However, any final decision on holding an inquiry for the compulsory purchase order can be made only if planning consent for the scheme is given. This is initially a matter for the two county councils. At present, they are not in accord over whether the proposals are a departure from the development plan, and I understand that Buckinghamshire expects to refer the application to the Secretary of State.
As my hon. Friend the Member for Beaconsfield pointed out, the scheme is a major one, expected to cost about £60 million and to take four years to construct. The options for it are limited by the geography of the Thames valley, where the flood risk occurs, and existing development. Most of the problem being addressed is in Berkshire, but a large part of the solution is proposed in Buckinghamshire, in my hon. Friend's constituency. There would undoubtedly be major disruption for people living in that area during the construction period. My hon. Friend is right to raise those issues and to seek to be satisfied that the proposals are properly examined and fully justified.
It is open to my right hon. Friend the Secretary of State for the Environment to call in these applications for his own decision. He has not yet come to a conclusion on that.

My hon. Friend will appreciate that, as the proposals could come before my right hon. Friend either through the exercise of that power or, should the county councils refuse the application the National Rivers Authority, it would not be appropriate to comment on the merits of the proposals.
In coming to a conclusion on whether these proposals should be called in for his determination, my right hon. Friend will consider the proposals in terms of whether they raise issues of national or regional significance or give rise to substantial controversy. He will need to decide whether the planning issues raised by the proposals are of a sufficient scale to warrant the cost and delays which a public inquiry would entail.
The county councils are concerned with whether the proposals are consistent with their structure plans, which provide the framework for development in the area. They must also take into account any other material considerations. A very large amount of gravel would be excavated to form the channel. They need to be assured that the options for flood relief have been fully explored and that this is the most effective means and produces the minimum amount of damage to the environment.
It is not the task of the county councils to assess the cost benefit of the scheme in detail. The National Rivers Authority is accountable to my right hon. Friend the Minister of Agriculture, Fisheries and Food in respect of its flood relief functions. The costs and benefits of the scheme are being looked at closely by the regional flood defence committee and the Ministry of Agriculture, Fisheries and Food. My hon. Friend will know that the National Audit Office has in its programme for the current financial year an examination of flood and coast protection programmes. There can be no more thorough scrutiny than that of the National Audit Office, save of course that of the Public Accounts Committee, of which my hon. Friend is a distinguished member.
I understand that 15 per cent. of the cost of the scheme may be eligible for grant by my right hon. Friend the Minister of Agriculture, Fisheries and Food. The remainder would be found by the NRA. The cost of the flood defence activity of the Thames region of the NRA is funded by a levy on the county councils and London boroughs in the whole of that region. The cost of flood defence in the current financial year works out at just over £5 per community charge payer in the Thames region. Out of a total levy income of £43 million for flood defence, the levy on Buckinghamshire comes to £1·67 million—about 4 per cent. of the total. Buckinghamshire would be expected to contribute a similar proportion to the relevant costs of the scheme.
The benefits would accrue to everyone who would suffer the effects of flooding. There are those whose properties would be directly affected, others who might be isolated by the floods, and others who could be affected indirectly through disruption to transport and communications.
Most of the benefits would go to people and properties in Berkshire. The local residents of Buckinghamshire would suffer disruption from construction for about four years. I appreciate the point of view of those who argue that the development in Berkshire, which has exacerbated the scale of the problem, should not have been allowed. It is open to the local planning authorities to include in their development plans such policies as they consider appropriate. I understand that both county structure plans


and the local plans for Slough borough council, the royal borough of Windsor and Maidenhead and South Bucks district all contain policies that restrict or presume against development in areas liable to flooding.
These are very large proposals, addressing a difficult problem. The issues that they raise are complex, and procedurally they affect the responsibilities of a large number of bodies, both in Government and outside it. I assure my hon. Friend that we are looking carefully at how best to take this forward. It could be that the best way forward, taking into account all the interests, including those of the residents, would be a joint public inquiry. We need to be satisfied that the cost and delays that would be

involved in such a course are justified both to resolve this matter and to provide the assurance that all the issues have been fully examined.
We expect to come to a conclusion on that in the next few weeks. In the interim, as an earnest of the importance that we attach to this matter, my Department has today issued article 14 directions to prevent the county councils from granting permission for the applications for the time being. I will let my hon. Friend know the decision when we have made it.

Question put and agreed to.

Adjourned accordingly at one minute to Eleven o'clock.